Aramco Concession Agreement

The change in Aramco`s concession is unlikely to result in any real changes in Aramco`s business unless there is an initial public offering (IPO), with the government having full control of the state-owned oil company and the kingdom`s oil fields. “A careful and thorough study of these two instruments reveals that their nature is similar. Both are based on an agreement reached by Saudi Arabia`s Finance Minister, which was later ratified by royal decree. This is how concessions are granted under Saudi law. The court is therefore faced with two concessions. One was granted to Aramco by the Convention of 29 May 1933, which corresponds to 4 Safar 1352, and was ratified by Royal Decree No. 1135 of 7 July 1933, i.e. 14 Rabie al Awal in 1353. The other was granted to Mr. A.S. Onassis represents in his own name and on behalf of the companies he ratified by an instrument, also called “Convention”, of 2 January 1954, corresponding to 15 Jamad al Awal in 1373, ratified by Royal Decree No. 5737 of 9 April 1954, in accordance with 6 Shaaban 1373.

It is understandable that many authors of an administrative law, particularly in France, and that in many countries legal practice considers that public service concessions must be interpreted restrictively because they presuppose the existence of users deprived of the advantage of free competition by others. However, since concessions for the development of natural resources for which there are no users do not constitute an exception to the rule of free competition, a restrictive interpretation in favour of the State cannot be justified. With regard to oil concessions, particularly in Saudi Arabia, where the principle of free competition should not be respected in this case, the interpretation is restrictive. It no longer has a base. The parties, the State, on the one hand, and the company, on the other, have concluded a “communicative” contract including reciprocal rights and obligations, without this affecting the users who are totally lacking. When the treaty was signed in 1933, there were no ships flying the flag of Saudi Arabia. The grant to Aramco of the exclusive right analysed above did not jeopardise the general interest of the State. The same is true today, because the granting of a right of priority to ships under the flag of a State cannot be justified by general interests relating to the sovereignty of the State, but only by the satisfaction of the particular interests of Mr Onassis and his undertakings. Even if it`s the kind. 1 and 22 of the concession do not justify a restrictive interpretation of Aramco`s exclusive rights. The two men – “Bert” Miller and “Krug” Henry – were crossed at bahrain`s Saudi tariff in Jubail, where they had worked the previous year for the Bahrain Petroleum Company (Bapco), a subsidiary of Standard Oil of California (Socal).

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