Oil Company Is Heart of the Confrontation : Saudi Arabia: Aramco is the economic lifeline that America, in effect, has come to defend.

In many ways, the focal point of the Persian Gulf confrontation is not a country or a principle, but a company--Saudi Aramco. It is the economic lifeline represented by Aramco, in essence, that America has come to defend with the largest buildup of forces assembled since Vietnam.

Aramco, headquartered in Dhahran, produces 96% of Saudi Arabia’s oil and controls one-quarter of the world’s known oil reserves. It employs the biggest community of Americans--about 4,700--in the Middle East. Its economic and political power dominates Saudi Arabia and the neighboring gulf sheikdoms and reaches to the farthest corners of the globe. When people here refer to The Company, they mean Saudi Aramco.

For the Americans at Aramco (short for Arab American Oil Co.), the gulf crisis threatens a lifestyle of unusual comforts and financial rewards, yet they, almost more than anyone, seem largely unconcerned about the potential dangers. Of the hundreds of expatriates who have resigned from the company since Iraq invaded Kuwait on Aug. 2, only about 70 have been Americans. For those who remain, life goes on much as before, behind compound walls that convey a sense of safety and isolation from the outside world.

Three old friends--all wives of Aramco oilmen--sat at the company-owned Rolling Hills Country Club the other day talking about the crisis with two visiting journalists. Their table overlooked a 27-hole sand golf course. The cars in the parking lot outside were American. The lawns surrounding nearby ranch-style homes on Lilac Avenue and Prairie View Circle were green and trimmed with flowers. The 640-seat cinema was advertising a first-run feature. It was as though a Houston suburb had been plopped down in the middle of the Arabian desert.

“I took a lot of flak when I came back after vacation in the States,” said Paula Reimer of Boston, who has lived here 11 years. “Friends said, ‘Paula, if you’re stupid enough to go back, at least leave your daughter behind.’ But I’m not nervous. I honestly can’t understand what people are talking about when they say life here will never be the same again.”

“Back in Calgary, we were both working, and we weren’t living high off the hog, and at the end of the month, there was nothing left,” said Chris Haltiner, the wife of an Aramco geophysicist. “Here, with one of us working, we’re much, much better off, and life’s better. I’d hate to go back and have to start all over again.”

“If we moved back, there would be a lot of pressures, like bills, having to buy a house, that we don’t have here,” added Lauri Zoll of Seattle. “When my kids, who are in school back home, get concerned about us being here, I have to remind them, ‘Remember, the news is exaggerated.’ ”

There are, nonetheless, nearly a million potential combatants who have brought the world’s most devastating weapons to within 200 miles of Aramco’s doorstep. The allied forces are quite literally stationed atop the principal energy reserves of Asia, Europe and North America. Within the theater of operations are the planet’s largest oil field, known as Ghawar, and the largest offshore field, Safaniya, just 35 miles from Kuwait. Ras Tanura is the largest oil port and oil refinery in the Middle East; the oil complex at Jubail is the most expensive industrial project ever undertaken by man.

On Aug. 1, Saudi Arabia was producing 5.3 million barrels of oil each day, with plans of gradually increasing output until it reached 10 million barrels by the turn of the century. In response to the invasion, however, the Saudis opted to open the tap as quickly as possible. Saudi production recently topped 8 million barrels a day, within striking distance of the 9.6 million produced at the height of the oil boom in 1980. “They surprised everyone, including themselves, by getting to 8 million,” said one petroleum analyst.

In order to stabilize prices, the Saudis now want to hit 10 million barrels by the mid-1990s. As a result, Aramco is recruiting more workers and letting new contracts.

Aramco, still the most prestigious place for young Saudis to gain employment, is the descendant of the kingdom’s first petroleum consortium. Commercial oil was discovered in the Eastern Province in 1938 when a well called Damman No. 7 broke loose after almost everyone except Max Steineke, an American geologist with Standard Oil Co. of California, which later became Chevron, had given up on ever finding anything in Saudi Arabia but heat and flies. Socal and three other U.S. oil companies eventually formed Aramco.

In the early days, Aramco operated as a quasi-government run by Americans. The first concession the Americans signed with Saudi Arabia, in 1933 before the Damman strike, paid the sheik of Jidda $1 per ton of produced oil; crude was then selling in the United States for 50 cents a barrel .

By 1951, Aramco was paying more in taxes to the U.S. government than it was to Saudi Arabia for royalties. In 1974, the Saudis began a 15-year program to buy out Aramco’s American owners, and the company is now 100% Saudi owned. Among its holdings are 50% of Texaco and 1,100 gas stations in the United States and Europe. Its work force numbers 45,000 and includes 50 nationalities.

Since the earliest days, foreigners at Aramco have enjoyed special privileges and excellent benefits. Women can work and drive within the compound, and swimming pools are not sexually segregated. Employees receive 40 days of vacation a year, a 25% hardship bonus for working in the kingdom and a generous education subsidy if their children go to high school abroad. Company subsidies enable each child to take three free trips a year back to Saudi Arabia.

Many of the Americans at Aramco are second- and third-generation employees, following in the footsteps of their fathers and grandfathers. Most have a loyalty to the company and--although few can speak Arabic even after years here--a deep respect for Saudi Arabia. They have become true expatriates, at home in an alien culture, clinging to what is American and living by the rules of Arabia.

“People say, ‘Why should we help Saudi Arabia? They’re not a democracy,’ ” said Beverly Pepperdine, who with her husband lived here for five years in the ‘50s and returned for keeps in 1977. “Well, the fact is, Saudi Arabia has benefited greatly from this government. When we first got here, the Saudis were living in shacks in the desert. Now they’ve got houses. They’ve got education, excellent health care. They’re bilingual. Free enterprise is flourishing. I don’t see how anyone can say this government hasn’t been good for the country.”