CNBC Insight The Story of Arabs Going Bankrupt & Entrepreneur’s First Oil Discovery – 1 day ago

Jakarta, CNBC Indonesia – After establishing the Kingdom of Saudi Arabia in 1932, King Abdulaziz al-Saud had an incredible headache. He had to rack his brains to be able to free his country from the trap of poverty.

The problem was, Saudi was in a difficult position at that time. Geographically, this country is very disadvantaged. The climate is hot and 95% of the land is desert. Water sources are rare. If this is allowed, the country will go bankrupt.

“How can we progress if there is no water,” thought King Abdulaziz at that time.

It was on this basis that his first order as king was to deploy foreign engineers to look for water sources. According to Toby Craig Jones in Desert Kingdom: How Oil and Water Forged Modern Saudi Arabia (2010), if water is available, then agricultural production can continue and the country will get a lot of income to drive development.

If this does not materialize, it is clear that the kingdom’s political position will be shaken. The Saudi state would be short-lived. So, water determines political power. King Abdulaziz asked for help from a US geologist named Karl Twitchell. Twitchell previously had experience building infrastructure in Yemen.

Together with local technicians, Twitchell explored the West. Every few kilometers, drilling is carried out tens of meters deep. Unfortunately, it all came to nothing. Abdulaziz is frustrated. Since then he has thought that Saudi may be destined to be forever drought and poverty.

Not long ago, Abdulaziz heard news that his neighboring country, Iran, had discovered oil sources. It is believed that this oil source will bring huge profits to the country for decades to come. From here, the King’s self-confidence reappeared.

Referring to the fact that Iran and Saudi have similar geographical conditions, Abdulaziz believes that his country also has abundant resources. Not just water, but oil. As a result, he ordered Twitchell back to lead the search for water and oil.

According to Naief M. Almtiri in Development of Oil and Societal Change in Saudi Arabia (1985), the urgency of searching for oil was unstoppable because in the 1930s Saudi was affected by an economic crisis which caused it to lose income from a decrease in the number of visitors to the holy cities of Mecca and Medina.

In 1933, oil prospecting operations began. This time targeting the Eastern region. Again, as Madawi Al-Rasheed mentioned in A History of Saudi Arabia (2012), the object sought was not found.

It was only after 5 years of digging holes in Arabian soil that geologists led by Marx Steineke and a local resident named Khamis bin Rimthan found a bright spot. On March 3, 1938, exactly 85 years ago today, black gold came out of the bowels of the earth in Saudi Arabia for the first time.

This news was welcomed happily by the entire royal family. After years of waiting, Saudi finally got its windfall.

In fact, this oil discovery broke the world record as the largest oil field. Since then, experts believe that there are still many other oil fields in Saudi Arabia that have not been exploited.

The kingdom then collaborated with a US company, namely the Standard Oil Company of California (SOCAL). This collaboration gave birth to a joint venture company called California Arab Standard Oil (CASOC) which later changed its name to Saudi Arabian American Oil Company (ARAMCO).

As expected, the oil well brought huge profits for decades to come. A prosperous country, people’s welfare increases. Water is no longer a problem, because they are able to filter sea water into drinking water. All of this happened because I had money.

More than that, thanks to the discovery of oil, Saudi was able to rise in class and was seen with honor by all countries, especially the United States. Now, Saudi is trying to no longer rely on oil as the main source of income and to make tourism a driving force of the economy.

[Gambas:Video CNBC]