From an unexplored desert to a near $2 trillion IPO: The 86-year history of Saudi Aramco in pictures
- Since its earliest years in the 1930s, Saudi Aramco has gone from a speculative attempt to find oil to the most powerful company in the global oil industry.
- The company has its roots in oil exploration by American engineers during the interwar years as the USA looked for a way to exploit growing international demand for petroleum.
- When drilling began in the 30s, no one was even sure if there was oil in Saudi Arabia.
- As Aramco marks its international listing, Business Insider decided to look into the rich and fascinating history of the company.
- Visit Business Insider's homepage for more stories.
Saudi Aramco's initial public offering this week, which saw it become the biggest publicly traded company in the world, has been a long time coming.The IPO has been rumored for several years, and was long expected to take place last year.
Aramco ultimately decided to list domestically on the Tadawul, it's main stock exchange, raising $25.6 billion in its IPO, all from local investors in Saudi and Gulf states.Shares surged on its first day of trading, jumping 10% and valuing the company at $1.9 trillion, making it around $700 billion more valuable than Apple.
To mark the IPO, Business Insider decided to take a look at the storied history of the oil giant.This article originally appeared on Business Insider in December 2017.Get the latest Oil WTI price here.
In the interwar years, global demand for oil boomed. The invention of the internal combustion engine was among the key drivers.
Before we get to Aramco, a little on the history of Saudi Arabia.
In November 1933, a management company for the concession, known as the California Arabian Standard Oil Company, or Casoc was formed. Casoc, in effect, marked the very beginning of what we know as Saudi Aramco.
By this point, no oil had been found, and no serious exploration had even started. In truth, no one was even completely certain that there even was oil in the country.
After preliminary surveys of the area, Casoc bosses back in California asked their teams to start drilling.
American geologist Max Steineke is credited with the first oil find.
Finally, on March 4 1938, a significant amount of oil was discovered.
Just over a year after the first discovery, Saudi Arabia's first tanker load of oil was shipped overseas. The tanker — called the D.G Scofield after one of the founders of the Socal oil company — held around 100,000 barrels of oil, roughly 5% of the capacity of modern tankers.
The next major discovery of oil would take place in 1941, when oil was found in Abqaiq. The discovery was made around five years after Steineke, alongside two other American engineers, J.W. Hoover and Jerry Harriss, had used the area as a base for their earlier explorations.
The Aramco name would first come into being in 1944, when Casoc was renamed to become the Arabian American Oil Company, or Aramco for short.
Aramco gradually increased its production throughout the course of the 1940s, reaching the milestone of 500,000 barrels per day in 1949.
A major step in Saudi Aramco's move toward domination of the global oil markets came in 1960, with the foundation of OPEC. The Organisation of Petroleum Exporting Countries combined the world's major oil producers, excluding the USA and Russia, into a group designed to coordinate oil production policy. OPEC is now seen as the most important organisation in the oil market, with huge influence over prices.
During its early years Aramco was not in the hands of the Saudi state, but that changed when in 1973, the Saudi government purchased 25% of Aramco.
Over the next couple of decades Saudi Aramco expanded aggressively through a mixture of acquisitions and the opening of numerous new oil production facilities. By 2009, the company was capable of producing as much as 12 million barrels of crude oil per day.
Aramco's ballooning size meant that by the early years of the 21st century, Saudi Arabia's economy was almost entirely dependent on oil revenues for growth and prosperity.
As a result, under the careful watch of thrusting young prince, Mohammed Bin Salman, Saudi Arabia has launched its so called Vision 2030 plan. Vision 2030 is effectively a plan to modernise and diversify the Saudi economy by taking steps that include exploiting untapped mineral reserves, boosting its position in the pantheon of global trade, and increasing revenues from religious tourism.
Part of Vision 2030 is the listing of Aramco in the international financial markets.
This month's listing marks the culmination of almost 100 years of work for Saudi Arabia's oil industry, and turned the company into the largest publicly listed business on the planet, surpassing Apple comfortably.
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