893.6363/12–745

The Chargé in China ( Robertson ) to the Secretary of State

No. 934

Sir: I have the honor to submit herewith53 for the Department’s information, copy of a memorandum which has been mutually accepted as a basis for further negotiation between the Chinese Government and the three foreign oil companies long established in China, with the ultimate object of forming a Sino-foreign company to develop certain of China’s indigenous petroleum resources. Also attached are copies of letters exchanged between Mr. C. E. Meyer of the Standard Vacuum Oil Company, head of the delegation from his company which acted as spokesmen for the companies in the negotiations which led to the issuance of this memorandum, and Dr. Wong Wen-hao, Minister of Economic Affairs and Chairman of [Page 1362] the National Resources Commission of the Chinese Government. The other two oil companies concerned are the Shell Company of China, Ltd. and the California Texas Oil Company, Ltd.

It is of interest to record that the Chinese officials negotiating this matter endeavored to have the scheme of organization of the proposed joint company provide for this company to engage not only in production, but to have as well exclusive marketing rights in China for the imported products of the three foreign oil companies, and also to have the present storage and transportation facilities of these companies absorbed into the joint company as part of the foreign companies’ contribution to same. On Mr. Meyer’s refusal to admit clauses covering such an arrangement to be written into a memorandum even as a basis for future discussion, the Chinese officials agreed to their omission.

While it is the feeling of the foreign oil company representatives that this is only the first step leading toward possible collaboration with the Chinese Government, one gets from discussion of the matter with Chinese officials the idea that there is little doubt in their minds but that this collaboration will take place. Whether it does or not is necessarily dependent on a number of factors, but in any event the fact that the Chinese Government has demonstrated a readiness to permit foreign capital to participate in the development of her petroleum resources is an encouraging sign.

Respectfully yours,

Walter S. Robertson
  1. Enclosures not printed.