Aramco, the United States, and Saudi Arabia: A Study of the Dynamics of Foreign Oil Policy, 1933-1950

277 Pages·2014·7.46 MB·English

by  Irvine H Anderson

ARAMCO, THE UNITED STATES, AND SAUDI ARABIA

ARAMCO
THE UNITED STATES
AND SAUDI ARABIA
A Study of the Dynamics
of Foreign Oil Policy
1933-1950
IRVINE H. ANDERSON
PRINCETON UNIVERSITY PRESS PRINCETON, NEW JERSEY
Copyright © 1981 by Princeton University Press
Published by Princeton University Press, Princeton, New Jersey
In the United Kingdom: Princeton University Press, Guildford, Surrey
All Rights Reserved
Library of Congress Cataloging in Publication Data will be
found on the last printed page of this book
This book has been composed in Linotron Times Roman
Clothbound editions of Princeton University Press books
are printed on acid-free paper, and binding materials are
chosen for strength and durability
Printed in the United States of America by
Princeton University Press, Princeton, New Jersey
To Donna and Mary

CONTENTS
Preface ix
List of Tables xiv
Abbreviations xv
I In the Middle Eastern Labyrinth 3
II Strategic Planners 35
III Diplomats 68
IV Field Personnel 108
V And Corporate Officers 124
VI Form a Coalition 160
Conclusions 198
Appendices
A Methodological Note 208
B Texts of Anglo-American Petroleum Agreement, 1943,
1944, and 1945 216
C Crude Positions of Jersey, Socony-Vacuum, Socal, and
The Texas Company, 1933-1950 229
Essay on Sources 235
Selected Bibliography 237
Index 253

PREFACE
ON MAY 29, 1933, Lloyd N. Hamilton of the Standard Oil Com­
pany of California and 'Abd Allah Al Sulaiman Al Hamdan,
finance minister of Saudi Arabia, signed an agreement giving
Socal exclusive rights to extract petroleum from an area larger
than the state of Texas, in return for a small cash payment and
royalties on future production of 4 shillings per ton (about $. 10
a barrel in 1933). The agreement went virtually unnoticed in the
rest of the world because almost no one—including experts from
the other major oil companies and King 'Abd al-'Aziz ibn 'Abd
al-Rahman Al Faisal Al Sa'ud himself—believed that there was
oil in the newly formed kingdom of Saudi Arabia. The United
States did not even have a consul—much less a diplomatic rep­
resentative—in the country at the time. Only a handful of Socal
geologists were convinced that oil was there, but events proved
them to be right a thousand times over.
In 1936 Socal formed a partnership with The Texas Company
to market Saudi oil, and responsibility for production was given
to a joint subsidiary—later renamed the Arabian American Oil
Company, Aramco. By 1941 test wells had begun to reveal the
extent of reserves that had been tapped into, but at that point the
American government still had little interest. For years the United
States had been a net exporter of petroleum, and to many people
this appeared to be the natural order of things.
In the midst of World War II, however, government planners
came face to face with stark predictions that the United States
would become a net importer after the war, and they were jolted
into attempts to assure continuing American access to Saudi oil
and rapid development of Saudi reserves to help conserve those
in the Western Hemisphere. Through a Petroleum Reserves Cor­
poration (PRC) created expressly for the purpose, Secretary of the
Interior Harold L. Ickes tried to buy a controlling interest in the