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 volume 9, issue #7 - Wednesday, April 07, 2004

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Saudi Aramco is not a state within a state

16-03-04 Try not to make too much of the women driving sport utility vehicles, the baseball diamonds, the thousands of Americans and Britons, or the cul-de-sacs with names like Prairie View, at the well-guarded headquarters of Saudi Aramco, the world's largest oil company.
"We are not a state within a state," Aramco's CEO, Abdallah Jumah, said as he discussed the company's influence through its control of more than 10 % of the world's oil production.

While the importance of Aramco to the Saudi economy and the global energy industry is hard to underestimate, the company, like other Western-influenced areas of society, has been caught in the cross hairs of religious conservatives for its American-style approach to managing its affairs.
For instance, while women nearly everywhere in Saudi Arabia are required by religious law to dress conservatively in black shawls and prohibited from driving, female Aramco employees are allowed to wear Western clothing and to drive -- on company property.

Old-fashioned American business practices also persist at Aramco, down to the gold watch after 30 years of service. Though its top executives are now Saudis, the official language remains English, making it easier for the 2,000 Americans who work for the company in Saudi Arabia, most of them living in this dusty city across the border from Bahrain.
"We've had a fortunate lifestyle here," said Thomas Owen, 51, an American who was born in Dhahran while his father worked for the company. He now works in the Aramco purchasing department.

The company still provides lots of perks to attract American employees, who call themselves "Aramcons." The benefits for Americans and other expatriates from rich countries include subsidized ranch-style suburban houses at the Aramco compound, free health and dental care at the company's own hospitals, nearly 40 vacation days a year, and free private education for children until high school, when the company will pay 80 % of boarding-school costs in the United States.
Still, the attacks last year on Western residential compounds in the capital, Riyadh, and heightened awareness of anti-American sentiment throughout Saudi Arabia, have reminded Aramco employees of their tenuous position in Saudi society. Dhahran was the site of a bombing in 1996 in which 19 US servicemen were killed and 64 wounded.

Reacting to criticism from religious conservatives and to economic pressures in a nation with growing unemployment, senior executives are trying to proceed with efforts to make Aramco more of a Saudi company. US and European employees, for instance, are no longer assured lifetime employment when they are hired as Aramco seeks to fulfil obligations to "Saudi-ize" its work force of 54,000. Critical areas of Aramco's operations, like the futuristic control room where technicians manage the nation's oil output, are already entirely staffed by Saudis.
The emphasis on employing more Saudis is a priority in a nation with a troubling joblessness dilemma. Out of a total population of about 24 mm, Saudi Arabia has roughly 6 mm foreign workers, most from Asia, who perform service jobs. Among Saudi men, the unemployment rate is 10 %, according to government statistics, but is probably as high as 13 %, said Nahed Taher, chief economist at National Commercial Bank in Jidda.

Women, who are barred from working in most areas of the economy, are not counted in unemployment figures. Aramco's field operations are another area where officials are seeking to hire more Saudis. At Shaybah, an isolated oil production site tucked amid sand dunes in the windswept Empty Quarter, nearly all of the 300 Aramco staff employees are Saudis, and there is pressure from above to hire more Saudis among 350 non-staff contractors.
"It's a little like the opposite of outsourcing in other countries, where the idea is to have fewer jobs. Sometimes these things are beneficial to the kingdom," said Mohammed Hatlani, operations manager at Shaybah, which produces 500,000 bpd of oil.

A job at Aramco, tobe sure, is a prize for many Saudis, too. Their benefits include relatively high salaries, no-interest home loans and, for some Saudi women, the opportunity to work in a Westernised environment. There is also no income tax in Saudi Arabia, making a stable job at Aramco, the largest single employer in the nation, more lucrative.
About 85 % of the work force is Saudi, up from less than 60 % three decades ago, when Aramco was controlled by US oil concerns and called the Arabian American Oil Co. It was formed in the 1940s by oil executives from California and Texas. Saudi Arabia nationalized the company in 1976 but kept its American management largely intact until the mid-1980s, when Ali Naimi became the first Saudi CEO. Naimi, who later rose to his current post as oil minister, remains chairman of the Aramco board.

Aramco, which produces about 8 mm bpd, generated an estimated $ 85 bn in oil revenue last year after prices climbed to their highest level in two decades, according to Brad Bourland, chief economist at Samba Financial Group in Riyadh. The company's financial clout extends to other areas, like its fleet of jet aircraft. All its pilots are trained in the United States or Britain.
"It feels almost normal here until you get outside the company and its compounds," said Richard Pattee, a native of Tacoma, Washington, who moved to Dhahran in October to pilot the company's new Boeing 737.

Few Aramcons speak fluent Arabic, even among second- or third-generation Americans who grew up in Aramco communities. Their privileged and relatively isolated life has at times been punctured by the fear of terrorist attacks when they venture outside the Aramco cocoon.
"I still think we have a safer life than people back in the States, but I'm a lot more aware now than I was before," said Cathy Rylands, who was born in Ras Tanura, another Aramco location, and returned to Saudi Arabia after marrying an Aramco employee.

Source: Washington Post



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