How the Japanese Entrepreneur Yamashita Tarō Discovered One of the Richest Oil Regions in the World in Saudi Arabia
In 1957, Saudi Arabia granted a private Japanese company, the Japanese Petroleum Trading Company, a concession to explore for oil in the Kingdom—specifically in the Offshore Neutral Zone shared with Kuwait. The company holding the concession at that time was owned by the Japanese businessman Yamashita Tarō.
Following the signing of the agreement, the Japanese government announced its support for the company’s efforts to explore and discover oil in the depths of the Arabian Gulf. Because the exploration concession was limited to a specific period, Yamashita felt the need to form a broad alliance with multiple Japanese companies to ensure the success of the operation within the allotted time. He succeeded in gathering 40 major Japanese corporations involved in oil‑related services to join him as investors, leading to the establishment of a new Japanese company dedicated to oil exploration in Saudi Arabia.
In late 1957, King Saud bin Abdulaziz approved the final draft of the agreement with the newly formed company, which was named Arabian Oil Company Ltd. (AOC). The new company assumed the exploration rights from the original parent company. The agreement between Saudi Arabia and the Japanese side included an annual rental payment to the Saudi government during the exploration phase, an additional payment upon the discovery of commercially viable oil, as well as taxes and a share of profits once production began.
The agreement stipulated that the company would be granted a two‑year exploration license, and if commercial quantities of oil were discovered, the company would receive a 40‑year investment concession starting from the end of the exploration period.
A few months later, Arabian Oil Company Ltd. held its first meeting and succeeded in obtaining a similar exploration concession from Kuwait for its portion of the Neutral Zone—an important boost to the company’s operations in the region.
According to Al Arabiya Net, the company soon began drilling operations. However, in the summer of 1959, a major incident occurred: a fire broke out at one of the drilling sites after large quantities of gas surged upward, igniting the derrick above the well and destroying the Japanese drilling rig. Firefighting teams rushed to the site, but the blaze continued for ten days before being brought under control.
News of the fire reached Japan with great concern, and many feared that Arabian Oil Company’s operations might fail or be halted. However, the Saudi chargé d’affaires in Japan visited the company’s headquarters in Tokyo and met with its president, Yamashita Tarō, offering his congratulations. He remarked:
“This is happy news that has taken on an unfortunate appearance.”
His statement implied that such a strong gas flow was a clear indication of the presence of oil—and that Saudi Arabia remained committed to supporting continued exploration.
This reassurance became the signal for the Japanese drilling effort to push forward in the Arabian Gulf. Oil began to flow in small quantities at first, not yet reaching commercial levels, but the company persisted. Eventually, it discovered one of the richest oil regions in the world.
Today, the region produces 300,000 barrels per day, with estimated oil reserves of 60 billion barrels, in addition to 25 billion cubic meters of untapped natural gas. The area includes Safaniya Field, the largest offshore oil field in the world.
In 2000, the Japanese concession expired, and Saudi Aramco assumed responsibility for managing Saudi Arabia’s share of the divided offshore zone between the Kingdom and Kuwait. Aramco Gulf Operations Company was established to manage the Khafji, Hout, Lulu, and Dorra fields.