ENERGY

How one Japanese discovered some of the world’s richest lands in Saudi Arabia

After signing the agreement, the Japanese government announced its support for the Commercial Petroleum Company and its drilling projects in the depths of the Arabian Gulf. (Archives)

In 1957, Saudi Arabia granted a private company in Japan called the Japanese commercial oil company the right to explore oil in the Kingdom, specifically in the marine neutral zone with Kuwait.

The owner of the company which was granted the right to explore back then was the Japanese national Yamashita Taro.

After signing the agreement, the Japanese government announced its support for the Commercial Petroleum Company and its drilling projects in the depths of the Arabian Gulf; the agreement was for a specified period of time.

The Japanese businessman felt the need for an alliance with multiple companies in the country to complete the process of exploration in the determined period. Yamashita Taro managed to sign with 40 Japanese investors to found a new Japanese Commercial Petroleum company working on oil exploration in Saudi Arabia.

In late 1957, King Saud bin Abdul-Aziz approved the final draft of the agreement with the new Japanese company, named "Arabian Oil Co., Ltd”. The latter received the concession for the exploration from the mother company. The agreement between Saudi Arabia and the Japanese company included an annual pay to the Saudi government during the exploration period, and an additional charge if oil was discovered in commercial quantities, along with the payment of taxes and share of the profits from the commencement of the operations.

The agreement grants the company a license to explore and drill for oil for two years. In case oil was discovered in commercial quantities, the Japanese company will enjoy a 40 years’ license from the expiration date.

A few months later the "Arabian Oil Co., Ltd.," held its first meeting. The company has been able to get a concession for exploration of oil from Kuwait in the neutral zone, which gave a big boost to its operations in that region.

The Arabian Oil Company began the exploration process, but a significant accident occurred during the summer of 1959, where a fire broke out in a petroleum exploration site after the gas pressure ignited the crane. Flames broke everywhere and firefighters rushed to control the conflagrations which lasted 10 days.

Japan received the reports with great distress. Some believed that the work of the Arabian Oil Company will fail as a result of this incident. Nevertheless, the Saudi in charge of the affaires in Japan visited the company's headquarters in Tokyo and met with Yamashita Taro congratulating him saying: "This might be a minor setback, but it reveals great success", referring to the flow of gas which inevitably means the presence of oil, and that Saudi Arabia is committed to continuing the exploration for oil.

That reference was the whistle for the continuation of the Japanese drilling machine in the Arabian Gulf. First, they discovered oil in few quantities, but the Japanese company continued drilling only to discover the richest oil region in the world, pumping 300 thousand barrels per day, with estimated oil reserves amounting to 60 billion barrels, an untapped reserves of natural gas up to 25 billion cubic meters, in addition to the Safaniya Oil field, the largest offshore oil field in the world.

In 2000, the contract between the Japanese company and Saudi Arabia ended; Aramco took over the Saudi share management in the Arabian Gulf. Aramco also established a division called Al Khalij joint operations to work in the Khafji fields of management, al Lulul, and Ad Dur.

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Last Update: Friday, 17 March 2017 KSA 16:01 - GMT 13:01
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