History of Aramco

Saudi Aramco dates back to May 29, 1933, when the Saudi government signed a concessionary agreement with Standard Oil of California(Socal), allowing the company to explore Saudi Arabia for oil. Standard Oil of California assigned this concession to a wholly ownedsubsidiary called California-Arabian Standard Oil Co. (Casoc). In 1936 with the company having no success at locating oil, the Texas Oil Company purchased a 50% stake of the concession.

After a long search for oil that lasted around four years without success, the first success came with the seventh drill site in Dammam, an area located a few miles north of Dhahran in 1938, a well referred to as Dammam number 7. The development of this well, which immediately produced over 1,500 barrels per day (240 m³/d), gave the company confidence to continue and flourish. The company name was changed in 1944 from California-Arabian Standard Oil Company to Arabian American Oil Company (or Aramco). In 1948, Standard Oil of California and the Texas Oil Company were joined as investors by Standard Oil of New Jersey who purchased 30% of the company, and Socony Vacuumwho purchased 10% of the company, leaving Standard Oil of California and the Texas Oil Company with equal 30% shares.

In 1950, King Abdul Aziz Ibn Saud threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50. A similar process had taken place with American oil companies in Venezuela a few years earlier. The American government granted US Aramco member companies a tax break known as the golden gimmick equivalent to the profits given to Ibn Saud. In the wake of the new arrangement, the company's headquarters was moved from New York to Dhahran.

In 1973, following US support for Israel during the Yom Kippur War the Saudi Arabian government acquired a 25% share of Aramco, increased the share to 60% by 1974, and finally acquired full control of Aramco by 1980. In November 1988, the company changed its name from Arabian American Oil Company to Saudi Arabian Oil Company (or Saudi Aramco).