Saudi Arabs, Americans and Oil By Robert L. Norberg
Executive Summary
In 1973, forty years after American oil explorers first went ashore on Saudi Arabia's eastern coastline, the Saudi government began an incremental buy-out of the concession-holding Arabian American Oil Company (Aramco). The richest prize in oil industry history, the generator of billions of dollars for the four American oil companies that owned Aramco, was being relinquished -- without rancor or recriminations. In 1933, Saudi Arabia lacked indigenous skilled workers, had few schools and virtually no civil infrastructure. Within the lifetime of the 67-year-old Ali Naimi, who joined Aramco as a boy and is now the Kingdom's oil minister, the world's largest integrated oil company was totally in Saudi hands -- from the rig floor to top management. This is an account of human resource development, an evolving concession agreement, the character of the relationship between the Saudi Arab government and Aramco, and the on-going Saudi-American energy industry partnerships.
Human Resources
In 1949, when Harry Snyder was hired to head up the training of Saudi Arabs for Aramco, James Terry Duce, a company executive in New York, told him what was expected: Your task at Aramco is to train Saudis as quickly and as soundly as possible to operate the Saudi oil industry. Inevitably, the Saudi Arab Government will eventually nationalize the industry. When that occurs, we want the young Saudis to have attained the proficiency that will enable them to operate the oil industry efficiently and with goodwill toward Aramco. Thus they will be serving their country's best interests and will be protecting the interests of our parent companies.1
[One] aspect that impressed me was the enormous, inordinate poverty of the inhabitants. As I found out later, nearly everybody was hungry most of the time. . . . There's no education, obviously. The few people who could read and write largely had taught themselves. And there were some very learned men, as a matter of fact, among this population, although most of it was illiterate. They had practically no mechanical skills. We had new employees who couldn't get out of a room because they didn't know how to use a doorknob."2
B. C. Nelson, who served Aramco in employee relations for many years, recalled in 1965 what it had been like for Saudis recruited to Aramco in the early years of the enterprise: Word spread to the desert and townspeople that in exchange for some physical effort the blue-eyed foreigners would give a man a handful of silver! And so they flocked to Aramco's budding oil centers . . . Imagine the effect on a recruit to be plunged into the mechanical age -- none of which fit in with his prior orientation or culture -- with little or nothing in his experience to help him adjust. The most amazing thing about these times in terms of one small facet of an Industrial Relations problem -- absenteeism-was not that, when they were handed their bag of money, they returned to their tribe with their glad tidings, but rather that they ever came back to work. Industrial discipline was practically unknown, so the amazing thing was that there was only a 75 percent turnover in the first few years.3 On-the-job training began on an informal basis in the 1930s and was soon complemented by rudimentary industrial training in classrooms. But without English, Arabic literacy, and basic arithmetic, there was a limit to the progress Saudis could make in job performance and advancement. In 1944, with operations revived after a wartime suspension, the Jabal (meaning "mountain" or "hill") School was opened in Dhahran.
Surely in 1944 no one expected history to remember the humble Jabal School. Yet the little company school endures as a symbol for development -- not for the development of an oil company, but for the development of a generation of very special young men. Many Saudis were introduced to the mystery of letters and numbers at the Jabal School. Among them were future scholars, successful businessmen and powerful executives.4
