Trouble for Aramco

Nothing was too good for old Ibn Saud, monarch of Saudi Arabia. Did he want a railroad? The Arabian American Oil Co. began a standard-gauge, 350-mile Arabian railroad, though convinced that highways would be more practical. Did he consider eight seats on the regular U.S.-bound T.W.A. plane too few to set aside for one of his 30-odd sons? A special plane was wheeled up. Aramco tried its best to anticipate Ibn Saud's every wish, from arranging lend-lease for Saudi Arabia and a cowboy outfit for one of the young princes to furnishing limousines, sweet water and gleaming refrigerators. U.S. technicians headed for duty in Saudi Arabia were assiduously schooled in Arab courtesy. No Christian chapel was built on the Aramco concession for fear of offending Ibn Saud's hard-shell Moslem subjects. The company wanted no trouble; it wanted to be allowed to stay around and get out the oil.

For His Majesty. For its pains, Aramco (owned by California Standard, Texaco, New Jersey Standard, Socony-Vacuum) got 440,000 square miles of Ibn Saud's domain, the world's largest oil concession, the most productive (866,000 barrels daily) and one of the most profitable.

Last year, when the Middle East blazed with disputes between oil companies and kings over royalties, Aramco announced a 50-50 profit split with Ibn Saud, increasing his 1951 oil royalties from $60 million to $100 million. Other oil companies, particularly Anglo-Iranian, privately deplored such generosity, but belatedly offered to do likewise. American-British-owned Kuwait Oil Co. had to give Kuwait's Sheik an even better split, and American-British-Dutch-French-owned Iraq Petroleum topped that by agreeing to bring Iraqis into the board of directors.

Last week the wave that Aramco set rolling swept back over the company: 72-year-old Ibn Saud decided he wanted more from Aramco. He summoned Aramco chiefs, complained excitedly: "Every time there's a decision to be made, you say you have to refer it to New York. Well, in the future, let's refer it here."

New Home. Jittery over what happened in nearby Iran, Aramco wasted no time arguing. The company promptly announced that it was moving its operating headquarters from New York to Dhahran. Board Chairman W. S. S. Rodgers, who is also chairman of the Texas Co., resigned. Into office as chairman went old Middle East Hand F. A. Davies, veteran oil diplomat, who has been serving as Aramco's executive vice president. The new chairman and other top executives would henceforth live in Saudi Arabia.

But the grizzled old warrior wanted more. By week's end, four directors, two vice presidents and two legal counselors converged on Riyadh and began soothing Ibn Saud. Before they are through, Aramco may have to: 1) admit Saudi Arabians to its board, 2) agree to pay more of Ibn Saud's royalties in dollars, less in sterling, 3) finance the Gulf-to-Mecca railway.

Said a vice president, mopping his brow: "It's a crisis, but not the really bad one. The bad crisis will come later."

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