JP Morgan and the Saudi Oil Colony

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[Editors Note: Dear Folks, This is a must read for a one stop primer on the history of the big oil boys. If you are busy when you come here, just save the link to read when you do have the time, as there is a lot to absorb here. For those of us finding it harder and harder to read books anymore, it is great to have someone like the Hendersons giving us these big spoonfuls at a time…Jim W. Dean]

by Dean Henderson (Veterans Today)
Excerpted from Chapter 3: The House of Saud & JP Morgan: Big Oil & Their Bankers in the Persian Gulf…

ARAMCO

With 261 billion barrels of crude oil lying beneath its soil, Saudi Arabia remains the lynchpin in the international oil grab presided over by the Four Horsemen.

As Joseph Story, Middle East analyst and former ARAMCO executive once said, “Only one factor is involved in where the price of oil is going to go, and that is Saudi Arabia”.

In 1933 Standard Oil Company of California (Socal) negotiated the first oil concession in Saudi Arabia with Saudi Finance Minister Abdullah Sulaiman. The Saudis were to get a 30,000 British pound loan and 5,000 pounds for the first year’s rent, all payable in gold. But US President Franklin Delano Roosevelt (FDR) had just embargoed gold exports in response to the Great Depression and Socal’s request for an exemption was turned down by FDR’s Secretary of State Dean Acheson.

Socal circumvented the embargo by procuring the gold from the London branch of Morgan Guaranty Trust. When the Saudis asked Socal officials what they should do with their newfound wealth, Socal recommended depositing it at Morgan Guaranty Trust. The Saudis complied.

In 1938 Socal, which later changed its name to Chevron, struck oil in both Saudi Arabia and Qatar and founded the Arabian American Oil Company (ARAMCO). Chevron quickly brought in Standard Oil of New Jersey (later Exxon), Standard Oil of New York (later Mobil) and Texaco as partners. This American half of the Four Horsemen would grow ARAMCO into the largest oil company in the world, nearly three times the size of Royal Dutch/Shell.

While British Petroleum (BP) and Royal Dutch/Shell, the two European Horsemen, owned the biggest share of the Iraqi Petroleum Company and dominated the Iranian Consortium, the US Horsemen now had their talons into the biggest prize yet, ARAMCO.

Other agreements were struck in the region as well. Chevron and Texaco formed a marketing arm known as Caltex, while jointly owning Bahrain Petroleum Company. BP joined with the Mellon family-controlled Gulf Oil to develop oilfields in Kuwait. By 1949, BP and Royal Dutch/Shell controlled 52% of Middle East oil reserves, while five US oil giants – Exxon, Mobil, Chevron, Texaco and Gulf-controlled 42%. [1]

ARAMCO soon boasted both the largest oilfield in the world at Ghawar and the biggest offshore field in the world at Safaniya. It also laid claim to expansive oilfields at Berri and Abqaiq. All told ARAMCO now controls over one-quarter of the world’s crude oil reserves.

Continue Reading…

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Posted on January 8, 2013, in History, Politics. Bookmark the permalink. Leave a comment.

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