Office of the Historian

891.6363/7–2149: Telegram

The Ambassador in Iran (Wiley) to the Secretary of State

plain
Tehran, July 21, 1949.

935. Iranian Government has now released to press Persian text of agreement concluded July 17 with AIOC representatives1 for revision AIOC concession terms. Agreement was submitted to Majlis July 19. Under agreement additional payments will be due from AIOC to Iranian Government within 30 days after agreement becomes effective amounting to just under 15 million pounds, made up as follows:

(a)
Royalty rate per ton production increased from 4 to 6 shillings gold, retroactive to January 1, 1948. Additional payment for 1948 is 3,364,459 pounds;
(b)
Tax payment to Iranian Government per ton production readjusted to one shilling per ton oil production, from January 1, 1948. Additional payment for 1948 is 312,900 pounds;
(c)
AIOC agrees to pay to Iran, as its share of general reserves outstanding at end of 1947 a sum of 5,090,909 pounds;
(d)
A formula has been agreed upon whereby the Persian share of the reserve is calculated only on the gross allocation to reserve, and not the net after reduction of income tax, with a provision that annual payment under this formula shall not fall below 4 million pounds. Payment due for 1948 amounts to approximately 5,900,000 pounds.

Parliament is expected to give necessary approval to agreement before its dissolution on July 26. New arrangements bring total Iranian Government revenue for oil revenue for 1948 to approximately 18,750,000 pounds. According unofficial Iranian estimates corresponding revenue for 1949 expected amount something over 17 million pounds.2

Repeated London 140.

Wiley
  1. For the text in English, see British Cmd 8425, Persia No. 1 (1951), p. 19. Tehran, on July 18, reported information from the British Ambassador that final agreement had been reached on all points except Article 16 of the concession agreement “relating to the gradual reduction in the proportion of non-Iranian employees. Iranians have now agreed to accept basic principle of British proposals on this article but since agreement could not be reached at once on exact wording it was decided to go ahead with conclusion remainder of agreement, since changes relating to royalty payments require approval of Majlis which will be dissolved next ten days.” (telegram 926, 891.6363/7–1849)↩
  2. The fifteenth session of the Majlis came to a close on July 28 without a vote on the oil agreement (telegram 965, July 28, from Tehran, 891.6363/7–2849). Tehran, on July 31, gave its “impression on basis conversations with important Iranians as well as general press comment that there is increasing consensus opinion among Majlis deputies and other public personalities that the bargain was not nearly good enough.” (telegram 973, 891.6363/7–3149)↩