How sand turned to gold
A history of Aramco and the royal house of Saud: an improbable partnership well greased with oil

Author: By Charles Maechling Jr.

Date: SUNDAY, February 28, 1999

Page: F1

Section: Books

Accustomed to thinking of Saudi Arabia as synonymous with fabulous reserves of Middle East oil, many Americans may not be aware that before 1932, when oil was first discovered in Bahrain, Saudi Arabia produced barely a trickle. ``Oil, God and Gold'' recounts the kingdom's astonishing rise to first place in the ranks of world oil producers; the staggering wealth that swelled the coffers of the House of Saud; and the role of ARAMCO in making this transformation possible.

The story begins in 1936, when Standard Oil of California (SOCAL), an offshoot of the 1909 breakup of the Rockefeller oil empire, obtained a concession from the impoverished King Ibn Saud. After several dry holes, SOCAL struck oil, and Ibn Saud, whose revenues had previously depended on pilgrims' fees for transit to the holy sites of Mecca and Medina, became suddenly solvent; his first royalty check was for $1,538,648. In partnership with Texaco, SOCAL formed ARAMCO and began pouring in personnel and equipment.

The author has used reports of geologists and executives to portray the ordeal of ARAMCO's early years. To those from the oil fields of America's Southwest, everything was strange and alien in this forbidding land -- the language, the customs and work habits of the people, the rigid codes of behavior. Tribal traditions had scarcely changed since the days of the prophet. Even for Texans, the climate was barely tolerable.

``The temperature when one arose of a summer morning would be perhaps 92 degrees, with a humidity so thick that the mere movement of dressing soaked a man in sweat. After dressing the thermometer rose to a top limit of 125. . . . Clothes were soaking wet, your whole body itching and burning with prickly heat, your head aching with the clang of the fierce sun.''

As ARAMCO built port facilities and the company town of Dhahran, the numbers of local labor grew. But from beginning to end, few Americans, including top executives, ever mastered more than a pidgin Arabic. They soon learned that to ask direct questions usually invited silence or non-responsive answers. Construction work had to be interrupted five times a day for prayers; laborers took off for hours or days without notice, though they usually came back. The Saudis belonged to the puritanical Wahabbi sect of the Sunni branch of Islam, and throughout the kingdom there were no movies and an absolute prohibition on importation and consumption of liquor, including beer. These and other sumptuary laws were enforced on natives and foreigners alike by an omnipresent religious police. Minor violations could result in a stiff fine, and repetition in expulsion.

Some of the quoted reports come from documents collected by a middle-level ARAMCO employee that turned up in 1993; these and other accounts provide an inside look at the Saudi monarchy. King Ibn Saud, who had unified the country not long before the oil discovery, was an impressive personality, 6 feet 4 inches tall, who neither smoked nor drank and led an austere life except in one respect. He rotated his four wives, had innumerable concubines, and left 36 acknowledged sons (daughters didn't count), each of whom was styled ``prince.'' He died in 1953, and his eldest son, who succeeded him as King Saud, had the same number of sons. Immense sums were lavished upon the upkeep and education of the princes at home and abroad. Fifty or moreattended school one at a time on the palace grounds, each arriving in a chauffeured limousine, attended by servants and bodyguards. One rare outsider had a chance to observe them:

``A prince's attendant was supposed to fetch a glass of water, sharpen pencils and perform similar chores. . . . If the Royal pupil felt he had enough for the day, he ordered his khawi [bodyguard] to gather his things and left the school. . . . All the work must be done in school, since the teachers had not yet succeeded in getting homework done or even assigned.''

Meanwhile the royal womenfolk -- wives, concubines, sisters, and daughters -- lived in a kind of communal purdah, with little to amuse them except for an obligatory evening attendance on a monarch.

ARAMCO played little part in World War II. Tankers were tied up, there was no pipeline as yet to the Mediterranean, and with Japan an enemy and the Indian Ocean unsafe, it was almost impossible to get oil out in any quantity. In any case, the United States was still the world's leading exporter, and throughout the war there was never a serious shortage. Despite heavy tanker losses from German submarines, convoys from the United States and the Caribbean kept the allied forces well supplied.

ARAMCO's golden years came after World War II. In 1947, capital requirements and the need for wider marketing networks led the original partners to bring the companies now known as Exxon and Mobil into the consortium, with a 40 percent share between them. Production increased steadily but the postwar years brought new complications. The establishment of the state of Israel with US backing met with implacable hostility from the House of Saud, and in turn led to the 1967 and 1973 wars and the creation of the Arab oil cartel. The emergence of Iraq and Jordan as fully independent states, and the withdrawal of Great Britain as the dominant military power in the Middle East, shifted Saudi security reliance to the United States.

During the oil boom of the '60s and '70s, ARAMCO crude production rose to its present level of 8.5 million barrels a day, and Saudi Arabia dominated OPEC and made it the instrument for controlling prices. According to the author, in 1976 the kingdom took in $25 billion in royalties and taxes. But in the same year, the wave of nationalizations throughout the oil world finally reached the Arabian peninsula and brought ARAMCO's monopoly to an end. After long negotiations, ARAMCO agreed to sell its assets to the new Saudi Arabian Oil Company, but on terms that more than compensated the four corporate partners. In addition to a huge down payment, the consortium obtained the right to purchase 80 percent of Saudi production at a favorable rate and to remain as the principal contractor.

The author's previous books rode the wave of public interest in World War II espionage, and this one suffers from the same addiction to hype and overblown personalities such as the eccentric British Arabist St. John Philby. The laudable detail is sometimes confusing and inconsistent (e.g., $8.5 billion in Saudi royalties on one page, $25 billion a bit later). And when Brown strays from his subject into history and international politics, the results are unfortunate: Britain's traditional stake in the Middle East was the route to India, not oil; mandates over Syria and Iraq were awarded by the League of Nations, not by the colonial powers; Secretary of State John Foster Dulles was not the ``enemy'' of the British Empire; Saudi Arabia was never a British protectorate. When it comes to international oil and politics, Daniel Yergin's 1991 ``The Prize'' is still the authoritative source.