Brennan_10-2017
Society & Culture

Core Values and the Kingdom

Saudi Arabia’s national oil and natural-gas company, Saudi Aramco, recently announced plans to go public in 2018.  Dating back to the fuel shortages of World War I, Saudi Aramco came into existence largely as a result of Standard Oil’s frustrating search for oil on the Arabian Peninsula.  But after a successful 1932 strike in Bahrain, Standard Oil outbid the Iraq Petroleum Company one year later to own 50-percent rights to the region from the Saudi government, to be shared under the name Arabian American Oil Company, later shortened to the current Saudi Aramco.  In 1950 King Abdulaziz, emboldened by the post-World War II decolonization movement, intimated he might expropriate Saudi Aramco’s operations.  The company’s risk-averse management panicked and offered him half the profits as propitiation in lieu of nationalization.

By 1980 the Saudi government had become the sole owner of Saudi Aramco, which today has the largest proven crude-oil reserves, at 260 billion barrels.  Saudi officials plan to use the proceeds of the IPO to endow a sovereign wealth fund, whose investment objectives probably won’t jibe with typical Western business or cultural practices.  And we’re talking real money here.  Based on Saudi Aramco’s two trillion dollar projected post-IPO market capitalization, the five percent sold to investors will endow the Saudi sovereign wealth fund with...

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