The Minister in Saudi Arabia (Childs) to the Secretary of State
166. Mytel 164. Upon my return to Jidda I learn Jidda representative Aramco informed Legation Finance Minister discussed with him question granting concession to Anglo-US group.
Aramco representative informed Finance Minister Aramco concession already included area sought by Anglo-American group which was consequently not open for other development. Finance Minister countered stating that at time Aramco concession granted, definition “territorial waters” by international [law?] restricted to line three miles off shore. Large body of law and opinion now to effect nation entitled to all oil on its continental shelf. Since this right subsequently arisen, it was not transferred Aramco by original concession; Aramco representative stated Finance Minister armed with large amount of “evidence” supporting his contention including Truman’s statement1 [Page 13]re rights of US Government to California tide-water oil which had obviously been furnished him by Anglo-American group.
Department in expressing its views on general principle of participation of British capital which is question raised by King may at same time wish invite SAG’s attention to difficult legal problems arising in connection granting concession to foreign oil company in territory which may give rise conflicting claims.
Sent Department 166, repeated London.