Memorandum of Conversation, by Mr. Fred H. Awalt of the Office of African and Near Eastern Affairs


Subject: Conversation with Aramco officials.

Participants: Mr. Fred Davies, Executive Vice President, Aramco, Dhahran
Mr. J. Terry Duce, Vice President, Aramco, New York
Col. W. A. Eddy, Aramco Consultant, Washington
Mr. F. Wilkins—NE
Mr. F.H. Awalt—NE


Mr. Davies stated that Aramco had discussed their position on the SAG demands with Ambassador Al-Faqih in the hope that he would interpret to his Government the oil company’s views in a more acceptable fashion and make the SAG more responsive to their arguments. Much to their surprise and consternation, however, the Ambassador seemed to be primed for the interview. He gave little regard to colored charts which Aramco had prepared in order to give graphic support to their position and he stressed that ability to pay must be the criterion for settlement with the SAG and not equality of payments in the PG area. He stated further that there was no doubt that Aramco could pay more and they must, therefore, do so. Otherwise, the Ambassador replied, his Government would make other arrangements for exploitation of its oil. He also indicated to Aramco consideration of a partnership arrangement with the SAG. Mr. Duce observed that they had rarely known Sheikh Asad to speak with such authority.

Mr. Davies stated that the question of the conduct of the negotiations in the United States arose and Sheikh Asad has referred the matter to his Government. Mr. Davies had no doubt that SAG would reply indicating Mr. Davies should return to Saudi Arabia at once for talks there. Mr. Davies said that Aramco planned to talk to Sheikh Asad again on October 31 regarding their charts and to have a Board meeting about November 3. Before the latter, however, they planned to consult the Department regarding the latest developments.1

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Mr. Wilkins thanked Mr. Davies for his report on the talk with Asad Bey and observed that possibly Asad had been primed as a means of bringing pressure on Aramco prior to Mr. Davies return. Mr. Wilkins also believed that the conduct of negotiations in the US might be disadvantageous unless someone with authority such as the Crown Prince or Amir Feisal should come. Mr. Davies, Mr. Duce and Col. Eddy agreed.

Mr. Duce added with respect to a partnership between Aramco and SAG that such an arrangement might force Aramco to withdraw from Saudi Arabia, that Middle East oil stability would be upset and that because total oil production would be reduced rationing might result in the US.

Mr. Wilkins replied that he had discussed this point with Mr. McGhee previously and that Mr. McGhee did not believe developments would take such a pessimistic turn.

  1. In telegram 259 from Jidda, November 1, the Embassy reported: “Aramco informs Davies, Executive Vice President, has decided following talks with SA Ambassador Washington to call another meeting Executive Committee Aramco board to discuss new aspects forthcoming negotiations. Since impossible convene meeting prior November 6, Davies arrival in Dhahran now postponed until November 9–10 and unlikely he will arrive Jidda for talks before November 15.” Telegram 273 from Jidda, November 4, reported Saudi Arabian Government officials had become increasingly impatient at the failure of Aramco officials to arrive and open negotiations. Documentation is in Department of State file 886A.2553.