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Aramco Toughs It Out

Cover Story


You don't find them much cooler than Sally Aslan. She and her husband, Frank, a 28-year employee of Aramco, the huge Saudi oil company, returned to Saudi Arabia from home leave in the U. S. on Jan. 7--a move many of their stateside friends thought foolhardy. Their compound in Ras Tanura--easily the largest crude-oil loading terminal on the planet--is a prime target for the Scud missiles the Iraqis are lofting into Saudi Arabia. Yet while other Aramco employees are fleeing, the Aslans are unshaken--even after spending the past night in a sealed "safe room" in their villa. "We feel a loyalty and a commitment to the company," Sally says. "We're staying, and we're helping out."

Such perseverance is helping the Saudi oil industry cope not only with the Iraqi threat but also with the disruption created by the vast allied military machine deployed over much of Aramco's 100,000-square-mile operating area. Over the last five months, Aramco has been an unsung hero of the gulf crisis, pumping up its oil flow more than 50% to make up for lost Kuwaiti and Iraqi supplies.

Since the shooting started, Aramco's top executives have maintained a watch around the clock in the windowless second-floor Dhahran operations room that monitors the company's complex oil and gas activities. Although Aramco decided to reduce output at the monster Safaniya field, which is within reach of Iraqi artillery, overall output has dropped by less than 1 million barrels a day, to 8 million. The fields nearest the front remain fully manned, and tankers are returning to load at Ras Tanura after the first few days of war jitters. "Nobody wants us to shut down," says one harried senior executive. "If we're not central to the world economy, we're at least a pillar of it."

While not a single Aramco installation has been damaged so far, Arabian Oil Co., a Saudi-Japanese joint venture, has been less lucky. Iraqi shells set several of the company's storage tanks on fire in the early days of the fighting, and several Japanese engineers had to be rescued by U. S. Marines.

'WHAT PROFITS?' If Aramco can keep up its bravura performance, the threat that the war will set off another oil-price shock will fade. The small loss of Saudi supplies is being made up by the release of stockpiles of crude oil by industrialized nations and other OPEC producers, such as Iran. Says Vahan Zanoyan, senior director of Washington-based consultants Petroleum Finance Co.: "There isn't going to be any war-related shortage of oil."

In fact, the sharp drop in crude prices since war broke out means that Saudi Arabia won't have as much money as people think to pay the war costs. Its windfall from the higher prices and production increase from 5.5 million barrels a day before the crisis is estimated by State Dept. officials to be $15 billion. That compares with Saudi commitments, including arms purchases and aid, of about $20 billion to defray the allies' costs in the war (chart). "What profits?" asks Abdullah T. Dabbagh, secretary general of the Saudi Chamber of Commerce and Industry. "We're in the red."

Of course, that doesn't mean it's time to cry for the Saudis. Their enormous oil reserves cost just $2.70 a barrel to produce, according to Paris-based Petrostrategies, making them so profitable that the government has never had to trouble its citizens with an income tax. But the Saudis' open-ended pledge to the U. S. to help cover war costs may strain the kingdom's finances if the war with Saddam Hussein drags on.

Moreover, some of the strain of long hours and repeated air raids is showing. Many of the 12,000 expatriates, about one-fourth of Aramco's work force, are opting for voluntary U. S. evacuation flights. Says one employee, a computer programmer from California: "This is definitely not what we came out here for."

Just the same, hours after an early morning Iraqi missile attack, an unflappable Sally Aslan was shooting a round at the 18-hole Surfside Country Club in the shadow of the Ras Tanura oil terminal. It's one of the world's more bizarre courses, formed of hardened crude oil that is sprayed on the sand. Aplomb like Aslan's, Aramco now could use barrels of.John Rossant in Dhahran, with Robert Buderi in New York

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