Nationalization in Part

Having forced oil companies to swallow two major price increases over the past year, the eleven nations that sit atop the world's rich pools of oil are now demanding a piece of the companies themselves. Their goal is "participation,", which is merely another way of describing partial, and probably increasing nationalization of the U.S. and European firms that drill in their territory. At a meeting in Beirut of the Organization of Petroleum Exporting Countries (OPEC), which ended last week, the largest consortium of oil companies, the Arabian American Oil Co., bowed to the inevitable and agreed in principle to sell 20% of its ownership to Saudi Arabia. Aramco's decision will doubtless cause a gusher of further participation concessions, which will increase the economic and political power of the producing nations, most of them in the Middle East.

Even so, the ownership issue between OPEC and the companies is far from resolved. The two sides have not agreed on the timing of the sale or how OPEC nations should pay for their company shares. By far the most difficult obstacle is how the price will be figured. The OPEC governments want to calculate their bill simply by totaling the book value of a company's equipment, real estate and other holdings. By that measure, Aramco, which is jointly owned by Standard Oil of California, Jersey Standard, Texaco and Mobil, is worth some $500 million. Yet company officials rightly believe that as the holder of a concession on Saudi Arabia's fabulous oil reserves until 1999, Aramco has a much higher commercial value. They insist on compensation for the loss of future profits.

Oil company officers hope to make up for at least part of their losses by expanding shipping and marketing operations, which are not affected by the drive toward participation. Nevertheless, the price of oil sold by partially nationalized operations will undoubtedly go up. Since the trend is beginning in the Middle East, the higher prices are expected to hit first in Europe and Japan, where customers depend on Moslem nations for nearly all of their oil.

Bail-Out Fund. Negotiations on the specifics of the deal with Saudi Arabia will continue this week, though no final agreement is expected for months. OPEC made it clear that member nations are more unified than ever in their determination to gain part ownership of the companies. OPEC members are considering starting a multimillion-dollar special fund "to assist any member country affected by actions taken against it by oil companies." Presumably the money could be used to keep afloat nations whose oil might be boycotted by Western oil buyers in participation disputes. Eventually the producing countries hope to get at least 51% control of the company operations in their areas.

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