Three Lessons of Partnership

By Peter J. Robertson, Vice Chairman
Chevron Corporation

Jeddah Economic Forum 2006

Jeddah, Saudi Arabia

It is good to return to the Jeddah Economic Forum and to be in Jeddah again.

I'm told that, as pronounced by those who live here, "Jeddah" connotes prosperity and happiness. It is certainly a city of great beauty and rich history -- and one that has a special significance for my company.

In 1933 in this city, Saudi Finance Minister Abdullah Al-Sulaiman signed the Kingdom's first concession agreement with our company's legal representative, Lloyd Hamilton, and we opened our first office here in 1934. For many years, Chevron has enjoyed our relationship with Xenel Industries in Jeddah, as well as with the Alireza family themselves -- and now the Al-Bakri family.

Visiting Jeddah is a reminder that our ties to Saudi Arabia go beyond being an oil company. We're proud that we helped launch the Saudi Cable Company so many years ago -- and we are proud to call Jeddah home for our Chevron Al-Bakri joint venture.

Before turning to my topic, I would like to respond to recent comments made in the United States about over-dependence -- or even "addiction" -- to Middle East oil.

Quite frankly I think these comments reflect a serious misunderstanding of the global energy supply system.

I believe Middle East oil can and must play a central role in this system and will continue to do so for the lifetimes of every one of us at this Forum.

Saudi Arabia, as it has for decades, will continue to promote international energy security and serve as a moderating force in balancing supply and demand. The Kingdom's large investments will increase production and export capacity well into the future.

At the same time, it is entirely appropriate to develop new, non-carbon sources of energy as well as more proactive efficiency measures. As the world seeks sustainable energy solutions to meet increasing global demand, we've got to move from "either-or" to "all of the above."

However, it is utterly futile to plan for energy independence when, increasingly, we live in a world of energy interdependence.

We must seek new ways for consumers and producers to work together - not in isolation - toward a global marketplace in which secure energy supplies are available to all.

Our conference theme, and its focus on Economic Growth, raises provocative questions. To me, the most challenging is this: How do we build a world economy that hears the "missing voices" - especially of the poor and the very young? The answer may shape the survival not only of business but of millions of fellow human beings. It is imperative that those "missing voices" are not only heard, but are provided opportunities to become productive participants in today's global economy.

For those of us in the petroleum industry, this question of economic participation is even more challenging and important. Energy today plays a more crucial role than ever in promoting economic growth and opportunity - both here in Saudi Arabia and around the world. The partnership of producers and consumers - of national oil companies (NOCs) like Saudi Aramco and international oil companies (IOCs) like Chevron - can make a critical difference in meeting this challenge.

Is it really possible to achieve, in the words of our conference theme, "an economy of common ground"?

I strongly believe the answer is yes. And I further believe that the answers to at least some of our conference's questions may be found by looking at the patterns of our own experience. In the business world, we have developed formal processes for identifying lessons learned. And, equally important, networks like this forum for sharing those lessons - the good, the bad and the in-between.

As every one of us in this room knows, however, talk is easy. The crucial step isn't just sharing the lessons, it's acting on them. I'll say more about this later.

We all know too, of course, that ultimately the keys to success are found in collaboration and partnership. An old Arab proverb warns, "In the Desert of Life ... the wise travel by caravan ... only a fool travels alone."

Separately and together, through their global partnerships, Chevron and Saudi Arabia have established long histories as caravan travelers. Saudi Aramco and Chevron share Standard Oil of California (SOCAL) as our grandparent. Today, Chevron's business alliances span more than 180 countries. Aramco, too, has a wide multinational presence. It has forged ambitious joint undertakings with governments and private industry both within and outside the Kingdom.

Either one of us could sing the praises of these coalitions. They've helped our industry prosper, of course. But they have also strengthened local and national economies. They've led to training, education and jobs for tens of thousands of people, especially in developing countries. They've helped build schools, health clinics and hospitals. They've assisted local communities in teaching occupational skills and supporting small business. They've joined the fight against HIV-AIDs.

In Indonesia, for example, where we're the largest private investor, Chevron has been a presence since the 1920s. In Riau Province, we've worked with government officials - and communities - to help students at all levels with assistance and scholarships. In 1955, we built the first senior high school in Pekanbaru. In 2001, we sponsored the first academically elite polytechnic university. In the years between, we built scores of schools from scratch, and renovated hundreds more. We've funded regional planning, and job and agricultural training. In response to the 2004 Tsunami, Chevron committed more than $13 million to the rebuilding effort - including training young Achenese in construction skills like carpentry and masonry. Perhaps the most telling statistic, however, is this: among our employees, from line workers to supervisors, more than 90 percent are Indonesian nationals.

Here in Saudi Arabia, we've built a similar record. Chevron is the Kingdom's oldest private partner - and the only major IOC with a continuous upstream presence here. We owe this country a deep debt of thanks. The vast Saudi resources at Dammam Dome, Ghawar and elsewhere launched SOCAL as an international player.

Today, in the Partitioned Neutral Zone, we are the only IOC to produce oil on behalf of the Kingdom. In the 1990s, in Jubail, we started Saudi Chevron Phillips, the Kingdom's first totally privately financed petrochemical joint venture. Two large-scale expansions are underway - Jubail Chevron Phillips now under construction with capital investment over $1.2 billion, and National Chevron Phillips now being planned with an added investment of $3.5 billion. Altogether, these projects will add up to more than $5 billion - all in partnership with the Saudi private sector.

I believe our experiences - in Indonesia, Saudi Arabia and elsewhere - have taught us three important lessons. These lessons have been crucial to our success here and around the world. They are based on a universal truth: nothing more powerfully cements a partnership than working together to solve common problems.

These lessons are:

  • First, respect differences. All partnerships require alignment around common goals. But true success thrives on innovation, and innovation requires collaboration - a spirit that is open to other people and ideas. This is why our first and greatest lesson of partnership must be to respect, appreciate and understand differences.
    • From the days of its earliest explorers, SOCAL made sure its employees respected Saudi traditions and culture. More recently, in the wake of 9/11, we've sponsored programs in the United States to combat racism and bigotry against Arabs and Muslims - just as similar programs of tolerance are offered here in the Kingdom.
    • We sponsor the Hamad Al-Jasser Library to help preserve the heritage of the Arabian Peninsula. We've supported efforts to improve the lives of women and children in the Middle East - and to increase understanding between the Arab world and America. Speaking for Chevron, such efforts could not be more timely.
  • The second lesson is to exchange knowledge. This is a direct outcome of collaboration. It is a fundamental requirement of any successful partnership. For example, the Wafra Steamflood pilot in the Partitioned Neutral Zone is benefiting from Chevron's heavy oil experience in places such as California, Indonesia and Venezuela. In turn, Wafra's lessons learned may help boost the Kingdom's production elsewhere.
    • For years, Chevron has led a technology consortium between Aramco and other IOCs who joined us in the Arabian American Oil Company. Chevron developed one of the first simulators used by Saudi Aramco to manage its reservoirs and today is sharing its latest simulator. Besides technical expertise, we've shared organizational know-how - providing Quality Improvement courses for Saudi Aramco managers, for instance.
  • Our third and final lesson is that besides sharing respect and knowledge, partners must share rewards. Striving to achieve the highest levels of performance should lift all stakeholders. As partners, we must ensure the widest possible distribution of opportunities and benefits. Chevron, for example, is proud that more than 90 percent of our Saudi Arabian Texaco employees, from rank-and-file workers to the president, are Saudi nationals.
    • Education programs are open to our Saudi workers from entry level to leadership jobs. Our scholarships help Saudi college and university students pursue degrees in the United States, the United Kingdom and their own country. Most of our Saudi professionals, in fact, are products of this program. A separate program encourages Saudi managers and professionals to apply for jobs throughout Chevron - today our Saudi employees are working in Houston, San Ramon and Bakersfield. Meanwhile, in 2005 alone, all Saudi Arabian Texaco workers improved their skills through some 56,000 manhours of training.
    • The rewards of our operations extend beyond job and education benefits. Our hospital and dental clinics at Mina Saud and Wafra record more than 40,000 annual visits by employees, relatives and local residents. We support the Saudi Wildlife Fund; the Khafji Girl's College; the King Fahad University of Petroleum and Mineral Resources; and the King Abdul Aziz Foundation for the Gifted.
    • We are also in serious discussions with the Ministry of Petroleum and the General Organization for Technical Education and Vocational Training regarding the establishment of a vocational training institute to prepare young Saudis for employment in the oil and gas services sector.

Respect, knowledge, rewards - Chevron's partnerships have taught us much about the value of sharing. Our long history in the Kingdom has also helped us appreciate the unique quality of Saudi leadership - not only as a moderating force in global energy markets, but as a force for stable development in this region.

Under the leadership of King Abdullah, the bounty of high crude prices is being used to aggressively pare down public debt, to lessen dependence on oil and to increase social investing. The Kingdom's recent success in acceding to the World Trade Organization will enhance its role in the global economy and encourage greater foreign investment here in Saudi Arabia.

The marquee project for these changes is King Abdullah Economic City. Besides creating more than 500,000 jobs, this impressive $26 billion undertaking will include a new port, an industrial park, a financial district, a major hotel and housing. Beyond the city itself, these non-oil, public and private investment projects will increase economic diversity, long-term growth and employment throughout Saudi Arabia.

Not surprisingly, these good economic times have seen a full blossoming of the Saudi stock market. The impact, however, extends beyond the Tadawul Index, which more than doubled last year. Today, over 2 million investors are active in the Saudi market, compared to only 50,000 in 2001.

Greater participation in the economy is mirrored by greater participation in society itself. Last February the citizens of Riyadh voted in the Kingdom's first municipal elections. Here in Jeddah, two women were elected to the leadership of the Chamber of Commerce. And clearly the number of women, participating in this Forum, is increasing each year.

All in all, it should not be surprising that last month, in a leading public opinion poll, Saudis expressed "a growing sense of self-confidence, satisfaction and commitment to their country." By a margin of four to one, Saudis declared they were better off today than four years ago.

As I said earlier, it's not enough to merely share the lessons we learn. We must act on them. We must turn words into deeds. So a critical attribute of partnership winds up being humility. Can we be humble enough to seek out - and adopt - the best practices of others?

I believe our industry - and Saudi Arabia - can pass this test; that we can continue to learn from and grow with each other; that Saudi Arabia will build on its progress; and that we in the petroleum industry - as we have for nearly three-fourths of a century - will prosper as its partner.

I urge all of us here today to commit ourselves to action as well as words.

Let us work together to improve opportunities for future generations of Saudi Arabia - and the world.

Let the benefits of an expanded Saudi presence in the international economy - in accordance with WTO requirements - lead to further and deeper engagements with the global trade and investment community.

And let the Kingdom continue and expand its support of public-private partnerships.

Finally, let us never forget that ancient advice I mentioned earlier. Let us pledge - always - to travel with the wise ... by caravan.

Thank you.

Updated: February 2006