Soon after nationalization, the OPEC countries realized they could not compete against the Sisters’ global distribution networks; the prospects of Kuwaiti refineries in Rotterdam and Saudi gas stations in Illinois evaporated quickly. Indeed, those countries that had their national oil companies sell crude directly to the world market were usually disappointed with the prices they got and the quantities they moved. So the OPEC countries have negotiated pacts under which the Sisters continue to pump the oil, for a fee, take a guaranteed share for themselves, and buy most of the rest at a fixed price.
It is a cozy arrangement for both sides. The companies to a limited extent can shop around for crude, rather than being tied to the countries where they have wangled concessions. But they still get to sell the oil from those former concessions, and without having to put any money into new wells and pipelines. Case in point: Saudi Arabia, which has bought 60% of Aramco from the firms that created it 45 years ago, Exxon, Mobil, Texaco and SoCal. But the main result, as SoCal Chairman Harold J. Haynes describes it, is that “capital investment will be supplied by the Saudis. We are relieved of that responsibility.”
Best of all, the OPEC governments allow the Sisters a reasonable profit. Last year the American partners in Aramco earned 27¢ per bbl. on their share of its output (they earned 25¢ in 1971, when they owned all the oil). The Saudis of course pocketed much more, and they are so pleased with the arrangement that they have never bothered to sign an agreement negotiated in 1976 to buy out the remaining 40% of Aramco. The companies are acting as if the agreement were in effect, paying the Saudi government as much as it would get if it were sole owner; thus the Saudis receive all the benefits of 100% control without having to put out money to complete the takeover.