800.6363/11–1945
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received November 27.]
Sir: I have the honor to refer to the Embassy’s despatch No. 25714 of September 27, 1945 which reported comments by Sir Norman Duke, Secretary of the Petroleum Division of the Ministry of Fuel and Power, concerning the development of Middle Eastern oil and American participation therein. There is given below the substance of a further conversation with Sir Norman Duke, who, as the Department is aware, headed for the British Government the discussions which took place at the official level during the recent petroleum negotiations with the United Kingdom in September.
The two points which emerged from Sir Norman’s conversation were these:
- 1.
- Britain in future can not depend upon Middle Eastern oil for strategic purposes, and
- 2.
- Britain’s interest is increased, therefore, in Latin American oil resources.
With respect to the first point, Sir Norman said that, although the Middle Eastern oil resources could not be relied upon for security purposes, they would have to be developed so oil would be available there if necessary for those purposes and if obtainable. In the latter regard, he said that this war had shown that, in the event of another large scale war, the Mediterranean would be closed, and while oil could be hauled around the Cape of Good Hope, that of course would not meet British war requirements. The desire of the British Foreign Office and of the British Military that the Arabian-American Oil Company’s project for a pipeline from Saudi Arabia to the Mediterranean20 go forward, coincides with Sir Norman’s statement that Middle Eastern oil must be developed for strategic reasons even though it cannot be depended upon for strategic purposes.
Sir Norman indicated that the above views are shared by other officials in the British Government. This points to the existence of an opinion in the British Government concerning the strategic aspects of the development of Middle Eastern and Latin American petroleum resources which approaches basic objectives of the United States foreign oil policy as formulated within the Department prior to the oil discussions with the United Kingdom in 1944. If this opinion within the British Government should determine a British foreign oil policy [Page 59] substantially in accord in important respects with our own objectives, it seems to the Embassy that the result as a practical matter would be of the greatest importance to the work of the Anglo-American Petroleum Commission to be established under the Petroleum Agreement. The Commission could then proceed to its tasks from an important area of general Anglo-American agreement. However, while there might be general agreement as to the need for cooperative development of Middle Eastern oil with its effect upon the development of Latin American oil, differences of course may exist concerning the extent and tempo of such development.
Speaking in further detail regarding the development of Middle Eastern oil resources, Sir Norman indicated that, so far as Britain is concerned, not only is there no bar to American participation in that development but additional American participation would be desirable. As in the conversation reported in despatch No. 25714, Sir Norman referred specifically to the concession negotiations in Iran last year which were terminated by the Iranian Government, and said that the Shell group had felt, before the negotiations had been brought to an end, that it had a good chance of obtaining a concession. Sir Norman then again suggested, as he had done in the previous conversation, that, if negotiations should be opened again in Iran, the British Government might tell Shell either to withdraw from the negotiations or seek an Iranian concession on the basis of sharing it with American interests. Sir Norman then further suggested, both from the viewpoint of compensating Shell and in line with the heightened interest of Britain in Latin American oil development, that Shell be given increased participation in Latin American resources.
[Here follows discussion on petroleum questions in Latin America.]
On the other hand, concerning the position of American oil companies in the Middle East, mention was made of the Kuwait marketing restrictions. It was gathered that no solution has been reached regarding this matter between the Gulf and Anglo-Iranian Oil Companies. Sir Norman said that a representative of the Gulf Oil Company had asked the Minister of Fuel and Power whether there would be any objection to that Company building a refinery in Britain to refine its Kuwait oil and that Mr. Shinwell21 had informed the Gulf Company that there would be no objection. Sir Norman also referred to the Red Line Agreement22 and remarked that he supposed the only [Page 60] ones who might object to its abandonment would be the French and GulbenMan.23
It was suggested that the mere weight of the position of the United States as regards Latin America and of Britain in the Middle East might constitute a part of the basis for the feeling of British and American companies concerning their relative positions in those areas.
. . . . . . . . . . . . . .
Respectfully yours,
Second Secretary of Embassy
- For documentation on this subject, see Foreign Relations, 1944, vol. v, pp. 8 ff.↩
- Emanuel Shinwell, British Minister of Fuel and Power.↩
- The text of the Group (Red Line) Agreement between private American and European oil interests on July 31, 1928, is printed in Current Antitrust Problems: Hearings before the Antitrust Subcommittee of the House Committee on the Judiciary, 84th Cong., 1st sess., pt. 2, pp. 1004 ff.; for further information on the agreement and events leading to the agreement, see Foreign Relations, 1943, vol. iv, p. 943, footnote 42.↩
- The Compagnie Française des Petroles owned 23.75% and Sarkis Colouste Gulbenkian 5% of the capital stock of the Iraq Petroleum Company.↩