229. Telegram From the Department of State to the Embassy in Iran1
Washington, August 23, 1967,
2122Z.
25746. Subject: Iranian Oil Consortium.
- 1.
- Senior executives American member companies Iranian Oil Consortium called on Shah in New York August 22 and later gave us following report of meeting.
- 2.
- Shah made predictable plea that Iran’s stability and reliability be taken into consideration in companies’ planning and investment. Stressed that Arab-Israeli crisis not ended and may revive.
- 3.
- Companies replied that 1967 offtake from Iran not likely far exceed last November’s estimate but might prove be 19–20 percent above 1966. Stated not possible at this time estimate increase for 1968. Stressed necessity recognize courage of moderate Arab countries in resisting radical demands against oil companies.
- 4.
- Shah concurred fully with latter point saying he would not ask companies do anything else, that if West forced out and others came into moderate Arab countries it would be bad for Iran. While stating that nothing should be done to hurt Saudis, Shah said that potential growth in Saudi oil exports should come instead from Iran. On other hand, Kuwait does not require increased oil income, Libya is weak and any increase in Libyan prosperity would only whet Nasser’s appetite take country over. Shah added he knows Iran could not replace any one Arab producer except possibly Iraq. He told companies second export terminal to supplement Kharg is needed and they should step up exploration. He reported French had made no important finds but had found promising seismic structure offshore in Gulf, which, however, may prove dry. He then raised subject of trans-Turkey oil pipeline, saying Iran not willing rely on Suez Canal and that while pipeline might not be economically sensible it was politically necessary.
- 5.
- While indicating concern about reliability of canal, companies noted that increasing size of tankers and tanker fleet make pipeline politically unnecessary. (Companies have informed us they will not commit themselves to participate in pipeline project. One of reasons is they question long-term reliability of Turkey.)
- 6.
- Shah did not press oil pipeline project and turned conversation to gas, including gas pipeline to Europe and hope that companies would [Page 419] involve themselves in petrochemicals in Iran. He indicated desire make Iranian oil fully competitive and mentioned progress in reducing redundant labor in oil installations in Iran.
- 7.
- Companies consider conversation part of useful continuing dialogue which they and Shah find helpful. They found Shah’s usual speeches milder than often in past. In sum, they feel results of conversation “not too bad,” although they remain concerned that Iranian expectations will continue to exceed realities.
Rusk
- Source: Department of State, S/S Files: Lot 68 D 475, Visit of the Shah of Iran, August 22–24/1967, Vol. II, Admin. & Sub. Misc., Press Releases & Memcons, V–39–B. Confidential. Drafted and approved by Eliot and cleared in draft by Meyer. Repeated to London.↩