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Overseas, the threat to Exxon is even greater. Incoming Venezuelan President Carlos Andres Perez has pledged to take over all foreign oil concessions, including plants and equipment, long before present agreements expire in 1983. The Saudi Arabian government has already bought 25% of Aramco, has negotiated an agreement to take over 51% by 1982, and will probably exert control much sooner.
Just where that will leave Exxon and the other majors is probably the big oil question of the next decade. Leaders of the producing countries have heady visions of refining, transporting and selling worldwide through their own national oil companies. Exxon officials, who can remember expropriations in Mexico, Peru, Cuba and Iraq, remain quietly confident that the producing governments in the end will turn to them for help. They already control refineries, pipelines, tankers and gas pumps that, they still believe, the producers cannot do without. Iran nationalized its oilfields in 1951, but a consortium in which Exxon has a 7% share still operates the wells and sells most of the oil.
Choice Area. It is clear, though, that producing governments will increasingly call the tune. Saudi Arabia has already slowed an ambitious Aramco expansion program, and will likely permit output to rise only slowly from the present 7.3 million bbl. a day even after the embargo ends; Faisal's government has little need for the revenues that additional sales would bring. Thus Aramco has next to no chance of boosting production to 20 million bbl. a day by 1982, as it once planned. That Saudi policy alone will keep worldwide oil supplies tight for years to come.
Exxon is gearing up to close the gap as much as it can. The company is rich in reserves of what oilmen call "politically insensitive crude"-oil least subject to nationalization. It is among the largest developers of the two richest fields discovered in the past decade: in the North Sea and on Alaska's North Slope. Both should reach peak output around 1980. Exxon also owns most of a field off Santa Barbara, Calif., which holds reserves estimated as high as 1 billion bbl. but cannot be fully exploited until environmentalist objections are overcome. More oil surely lurks beneath the Gulf of Mexico. When the Government two months ago auctioned off drilling leases on promising lands off Florida, Exxon picked up one of the choicest areas by bidding $343 million.
In confronting the changes now racking the oil business, Exxon is not without its strengths-to put the matter in a classic Exxon understatement. Whatever Arabs or Congressmen do, the company's wealth, experience, savvy, diversity and proven ability to adjust promise to keep it the most formidable tiger in the world of oil.