Saudi Arabia "Nationalize" Oil

[aleph_0]

I've heard from a few Objectivist sources, one of which was Leonard Piekoff, that in 1950 Saudi Arabia "de facto nationalized" its oil fields. I wonder if anybody knows the meaning of this and any evidence for its truth. Who now owns the oil fields?

[KendallJ]

Oil nationalization was prevalent in the Middle East into the 1970's. The Saudi state company is Saudi Aramco, and here is the history. It states that the company was acquired in the 70's by the Saudi State. Now, "acquired" where you are talking about a state entity can be euphemistic. One should look at the terms of the sale to see if the investors weren't actually forced to sell.

It's odd to me that one discovers the largest natural oil reserve, develops it, has the competitive advantage to work the field, but yet, sells out. Something is fishy.

http://en.wikipedia.org/wiki/Saudi_Aramco

[DavidOdden]

I've heard from a few Objectivist sources, one of which was Leonard Piekoff, that in 1950 Saudi Arabia "de facto nationalized" its oil fields. I wonder if anybody knows the meaning of this and any evidence for its truth. Who now owns the oil fields?

Well, Standard Oil signed an agreement with the Saudi government before WWII allowing them to explore for oil, and eventually oil was found. A company was formed, eventually known as Aramco. The Saudi govt. then started to acquire an interest in Aramco (buy up shares) and they ended up with 100% control 25 years ago. As I understand it, the Saudi govt. nationalized Aramco's property in 1976. I'm not aware that the land itself was ever out of Saudi hands (until recently, foreigners could not own land in Saudi Arabia).

[aleph_0]

Interesting... but it doesn't mention this 1950 date. If I remember right, Peikoff said that America, Britain, and France were all involved. In response, America was sending jets to Arabia, but by threats from Britain and France, withdrew them. Now I'm not particularly interested in those details, but I am interested in the significance of the event on 1950.

Thank you, though, that does help my research.

... From the looks of this article, it seems Saudi Arabia simply bought up the shares of the company and so, in effect, bought the company. As far as I know, this is standard stock-trading practice and happens in all commercial nations.

[KendallJ]

The story is interesting, but I'm not sure what it refers to.

Note, these transactions in the 70's were probably not public stock transactions, i.e. there is no stock traded on a market. Which means that it would have been a private deal, with the price of the stock negotiated privately. All sorts of things can happen there that aren't disclosed, and it still looks like a "sale". I have no details here. It's just a bit fishy.

[aequalsa]

I've heard from a few Objectivist sources, one of which was Leonard Piekoff, that in 1950 Saudi Arabia "de facto nationalized" its oil fields. I wonder if anybody knows the meaning of this and any evidence for its truth. Who now owns the oil fields?

Confessions of an Economic Hitman-john perkins, is an enjoyable read and has a sizable section on the house of Saud and our dealings with them from 1950 to present. A lot of descriptions of the backroom dealings you are looking for.