Fortune

Inside the Kingdom of Oil

A POTENTIAL IPO COULD MAKE SAUDI ARAMCO THE WORLD’S MOST VALUABLE COMPANY. MIGHT IT ALSO BRING PROFOUND CHANGES TO SAUDI ARABIA?
A Saudi Aramco gas-oil separation plant in the remote Empty Quarter desert.

FROM THE WINDOW of our small plane flying low over the desert, Saudi Arabia’s Empty Quarter looks as remote as the name suggests, with burnt-orange dunes stretching into infinity under the blinding sun. Not even the Bedouin nomads with their camels are visible, because there are too few of them amid the vast landscape. It’s only when the plane bumps down on an empty runway at an outpost called Shaybah that it is clear that the world’s biggest sand desert is not, in fact, empty. We are hundreds of miles from the nearest Saudi town. Yet rising out of the sand between the dunes is a state-of-the-art labyrinth of metal pipes and cylindrical tanks, which day and night pump the crucial commodity that keeps our modern world ticking: oil. “We generate our own electricity, we have our own water supply,” says Khalid Al-Jamea, manager of the Shaybah oilfield, after he meets our plane on the desert strip and hands us chilled face towels to dull the shock of the 110-degree heat. “We are cut off from the world.”

In more ways than one, Saudi Arabia’s apartness from the world may be on the verge of ending—with major consequences for this deeply conservative Islamic kingdom, and for global financial markets too. More than 80 years after American wildcatters pitched their tents in the Arabian desert in a hunt for oil, the government-owned Saudi Arabian Oil Co.—Saudi Aramco for short—is considering whether or not to sell about 5% of the company to outside investors. The long-planned IPO, tentatively set for 2018, would end 38 years of total state control, in which the world’s biggest oil producer has had exactly one shareholder: the Saudi king.

The scale of the operation is colossal. Saudi Arabia claims that its proven oil reserves are a head-spinning 260.8 billion barrels—13 times as large as the reserves booked by Exxon Mobil, the biggest independent oil company in the world, and the most of any country other than Venezuela, where much of the reserves are unreachable. Saudi Arabia also claims it has more than 298 trillion cubic feet of natural gas. Based on those resources,

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