890F.6363/7–947: Telegram
The Minister in Saudi Arabia (Childs) to the Secretary of State
272. Tapline negotiations Jidda successfully concluded. Signature agreement expected to be signed tomorrow Riyadh by Lenahan1 and Finance Minister.
Tapline whose corporate structure identical with, that Aramco is sister company and not subsidiary latter. Agreement negotiated by Tapline with SAG grants former all advantages Aramco concessionary [Page 663] agreements deemed necessary by Tapline for construction, maintenance and operation pipe line. No transit fees are payable for 15 years at which time they will be not less than those paid in by [paid to?] other neighboring countries. No fixed annual obligation is assumed for underwriting SAG security expenses in protection pipe line. Instead Tapline assumes fair and reasonable costs such security protection as well as expenses, providing water, schools, hospital facilities and other amenities for each of six settlements where six pumping stations will be situated. It is contemplated personnel at each of oil pumping stations will include 10 Americans, 75 Arab workmen and 50 Saudi soldiers. Facilities offered by Tapline will be made available not only to these but also to Arabs not directly engaged in project living within reasonable distance pumping stations. Lenahan estimates Tapline thereby assumes immediate total annual financial obligation to SAG of between 500,000 and $1,000,000.
In negotiation agreement he has taken farsighted view in the opinion that it is far better for company to err on side of generosity than to be made to appear as having no regard for social responsibilities to Moslem Saudi Arabia. He believes agreement with which Saudi Arabian Govt appears much pleased will pay intangible dividends of good-will in contrast to IPC pipe line agreements which have engendered much ill-will.2
Sent Dept, Baghdad at 22, Tehran as 21.
Copies by pouch to Arab capitals.