Saudi, Inc.
Aramco as a corporate history, from concession to national champion.
Summary
Wald, an energy historian and consultant, wrote a history of Saudi Arabia through its oil business, from the 1930s concession to the American consortium that became Aramco, through nationalisation, to the period around Mohammed bin Salman's Vision 2030 and the plans to sell shares in Saudi Aramco.
Her organising argument is that the Al Saud have run the country as a family business, making commercial decisions with commercial logic rather than acting as an ideological or purely political actor. She traces the gradual acquisition of Aramco from the American companies, completed in 1980, and argues it was executed with patience and legal care rather than through the confrontational nationalisations elsewhere in the region. She documents the training of Saudi engineers and managers who took over the operation, which is why the company remained technically capable after the transfer.
The oil market chapters cover the price decisions: the 1973 embargo, the swing producer role of the 1980s and the decision to abandon it in 1985 by moving to netback pricing, which collapsed prices and disciplined other producers, and the 2014 decision not to cut production against American shale.
The later chapters cover diversification, the Public Investment Fund and the initial public offering plans as they stood before the listing.
Wald is sympathetic to her subject and writes about the ruling family's commercial competence rather than about the political system, the human rights record or the treatment of dissent, which readers should note. The book predates the 2019 Aramco listing, the Khashoggi killing's consequences, the 2020 price war and the subsequent shifts, and its treatment of Mohammed bin Salman is necessarily provisional.
Key takeaways 7
- The Al Saud acquired Aramco from the American companies gradually through negotiation rather than by expropriation.
- Training Saudi engineers and managers over decades meant the company remained technically capable after the ownership transfer.
- Saudi Arabia abandoned the swing producer role in 1985 by moving to netback pricing, which collapsed prices and disciplined competitors.
- The 2014 decision not to cut production was a deliberate attempt to test the resilience of American shale producers.
- Oil production decisions are made with commercial reasoning about long-run market share rather than as political gestures.
- Aramco's operational capability is unusual among national oil companies, most of which declined after nationalisation.
- Diversification plans depend on the same oil revenue they are intended to replace, which constrains how fast they can proceed.
Who should read it
Investors and operators in energy and in Gulf markets who want the commercial history of Saudi oil policy from a perspective sympathetic to its decision-making.
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Where it sits in the reference 3
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