Saudi Gazette reportDHAHRAHN —

In 1933, a historic agreement between Saudi Arabia and Standard Oil of California (Socal) marked the beginning of a partnership that would reshape the Kingdom’s future and elevate it to global energy prominence.

The oil concession granted to Socal laid the foundation for a development boom and long-term economic transformation, setting Saudi Arabia on a path from a desert kingdom to an energy superpower.

This landmark deal led to the creation of the California Arabian Standard Oil Company (CASOC), a joint venture dedicated to exploring for oil in the Kingdom’s vast and untapped deserts.

Initial efforts were met with little success, but persistence paid off. In 1937, Socal’s chief geologist Max Steineke, a pivotal figure in the enterprise, urged the team to keep drilling despite early disappointments.

His determination bore fruit in 1938, when Dammam Well No. 7 — later called "Be’er Al Khair" (Well of Goodness) — began producing oil in commercial quantities. This momentous discovery laid the first bricks in Saudi Arabia’s economic future, heralding a new era of prosperity.

By 1949, oil production had surged to 500,000 barrels per day. The once experimental operation had become a cornerstone of global energy markets. CASOC was soon renamed the Arabian American Oil Company — Aramco — signifying the growing depth of American involvement and expertise in Saudi Arabia’s oil sector.

A pivotal development came in 1950 with the completion of the 1,212-kilometer Trans-Arabian Pipeline (Tapline), linking the oil fields of the Eastern Province to the Mediterranean Sea. This engineering feat slashed transportation costs and time, enhancing Saudi oil’s access to European markets.

In 1951, after two years of offshore exploration, Aramco discovered the Safaniya oil field, which remains the largest offshore field in the world. By 1958, the company’s annual crude oil production had exceeded one million barrels — a testament to its rapid expansion and technological advancement.

Throughout the 1960s and 1970s, Aramco continued to break records. In 1962, cumulative crude production hit 5 billion barrels. By 1981, crude and refined product shipments from Ras Tanura — one of the world’s largest export terminals — surpassed one billion barrels annually.

The Saudi government, recognizing the strategic value of the sector, gradually increased its stake in Aramco—acquiring 25% in 1973, 60% in 1974, and full ownership by 1980. This culminated in the creation of the Saudi Arabian Oil Company (still known as Aramco) in 1988.

Eng. Ali Al-Naimi, a former oil field worker and trained petroleum engineer, became the first Saudi president in 1984 and Aramco’s first CEO in 1988, signaling a new era of national leadership in the sector.

From the late 1980s, Aramco began its transformation into a fully integrated energy company. It entered the U.S. market through Star Enterprises, a joint venture with Texaco, later restructured as Motiva with the inclusion of Shell. In 2017, Aramco became the sole owner of Motiva, including the Port Arthur Refinery in Texas — the largest of its kind in North America.

International expansion continued throughout the 1990s and 2000s. Aramco acquired a 35% stake in Korea’s SsangYong Oil Refining Company (renamed S-Oil), a 40% stake in the Philippines' Petron Corporation, and a 50% stake in Greece’s Motor Oil (Hellas). These deals established Aramco’s global presence across refining and marketing operations.

Innovation became a central pillar of Aramco’s identity. In 1997, it developed POWERS — a cutting-edge reservoir simulation system. This technology evolved into GigaPOWERS in 2010 and the industry-first TeraPOWERS in 2016, enabling unprecedented accuracy in modeling giant oil reservoirs.

In 2000, Aramco opened a world-class research and development center in Dhahran, which later became the nucleus of a global research network. The center fostered breakthroughs in extraction, environmental safety, and cost efficiency — cementing Aramco’s status as a technology leader.

As global energy dynamics evolved, Aramco diversified its portfolio. It began investing in advanced applications for oil beyond fuel, including non-metallics and crude-to-chemicals technologies. These initiatives seek to unlock new markets and increase the value of every barrel extracted.

The historic Saudi-American alliance that began in 1933 continues to echo through every barrel pumped and every innovation achieved.