How it started
History
Saudi Aramco's origins trace to the oil shortages of World War I and the exclusion of American companies from Mesopotamia by the United Kingdom and France under the San Remo Petroleum Agreement of 1920. The US administration had popular support for an "Open Door policy", which Herbert Hoover, secretary of commerce, initiated in 1921. Standard Oil of California (SoCal) was among those US companies seeking new sources of oil from abroad.
In 1932 the Bahrain Petroleum Company, a wholly owned SoCal subsidiary, discovered the first oil field in the Persian Gulf outside of Iran.
The Saudi Arabian government granted a concession to SoCal in preference to a rival bid from the Iraq Petroleum Company. The concession allowed SoCal to explore for oil in Saudi Arabia. SoCal assigned this concession to a wholly owned subsidiary, California-Arabian Standard Oil Company (CASOC). In 1936, with the company having had no success at locating oil, the Texas Company (Texaco) purchased a 50% stake of the concession. After four years of fruitless exploration, the first success came with the seventh drill site in Dhahran in 1938, a well referred to as Dammam No. 7. This well immediately produced over 1,500 barrels per day (240 m3/d), giving the company confidence to continue. On 31 January 1944, the company name was changed from California-Arabian Standard Oil Co. to Arabian American Oil Co. (or Aramco). On 17 March 1947, Standard Oil of New Jersey (later known as Exxon) purchased 30% and Socony Vacuum (later Mobil) purchased 10% of the company, with SoCal and Texaco retaining 30% each. The newcomers were also shareholders in the Iraq Petroleum Co. and had to get the restrictions of the Red Line Agreement lifted in order to be free to enter into this arrangement.
In 1949, Aramco had made incursions into the Emirate of Abu Dhabi, leading to a border dispute between Abu Dhabi and Saudi Arabia.
In 1950, King Abdulaziz threatened to nationalise his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50.
From Wikipedia’s article on Saudi Aramco, shared under CC BY-SA 4.0.2