890F.6363/73a: Telegram

The Secretary of State to the Minister Resident in Saudi Arabia ( Moose )

84. In order to assure adequate supply of petroleum production for possible military operations in the Far East, the United States Government has decided to proceed with the erection of a large refinery in the Middle East. The location of this refinery has not yet been finally decided, however, this Government is now in discussion with representatives of the California-Arabian Standard Oil Company with a view to possibly locating this refinery in Saudi Arabia. It might be a very large project and its operation should add greatly to the revenue of Saudi Arabia. If agreement is reached, the undertaking [Page 939] will be in accordance with terms of the concession and the refinery will be erected and operated by the California-Arabian Company in accordance with that concession.

The California-Arabian Oil Company is, we believe, advising the Arabian Princes36 of this project and plans to instruct its representative in Saudi Arabia to convey this information to the Saudi Arabian Government. Will you kindly immediately get in touch with that representative and make suitable arrangements whereunder you would inform Ibn Saud of this matter at the earliest opportunity after the Company representative has done so. Such an opportunity might occur when with General Royce’s37 mission you visit Riyadh as suggested in the Legation’s 155, October 7, noon.38

You may also inform Ibn Saud that arising out of and in connection with this large refinery project, which will involve large scale Government financing, in one form or another, the Government is also talking with companies that own California-Arabian Oil Company of the possibility of securing a participation in the California-Arabian Company such as might protect the public interests in this Government investment. These discussions have not yet reached definite conclusion.

If for any reason this instruction is not, in your judgment, a satisfactory way of bringing the matter before Ibn Saud, you are authorized to delay action and immediately communicate your suggestions and views as to how this project should be handled to the Department.

  1. For correspondence relating to the visit to the United States of two sons of King Ibn Saud, see pp. 840 ff.
  2. Maj. Gen. Ralph Royce; for correspondence relating to the Royce Military Mission to Saudi Arabia, see pp. 904 ff., passim.
  3. Ante, p. 904.