Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

880.2553/8–552

No. 263
Memorandum of Conversation, by the Chief of the Petroleum Policy Staff(Eakens)

secret

[Washington,] August 5, 1952.¹

Subject:

• Continuation of Discussions with the British Embassy on Anglo–American Oil Problems.

Participants:

• Mr. J. A. Beckett, British Petroleum Attaché
• Mr. R. W. Bailey, First Secretary, British Embassy
• Mr. Longanecker–NE
• Mr. Eakens—PED

This was the first general discussion of Middle East oil problems held with the British since June 20, 1952.

The postponement of the monthly meeting, which it had generally been decided to hold, resulted from the fact that there was some feeling in the Department that American and British company problems in the Middle East could not be very usefully discussed intergovernmentally until the implications of the FTC Report and the grand jury investigation of the international oil companies had become clear. It was decided that there was no objection to holding these discussions provided there was no attempt to reach agreement on such problems, and it was on this basis that this meeting was held.

The meeting was convened at the suggestion of the British who said that they had some matters which they wished to discuss. The one subject which the British representatives discussed at some length was the question of a decentralization of the activities of the oil companies in the Middle East. Mr. Beckett began the discussion by outlining the U.K. views on decentralization. These views are as follows: They feel that the British companies are in a somewhat different position than Aramco in respect to establishing their headquarters in the Middle East. They doubt that it would be advisable or wise for IPC, which is the one British company in operation in the Middle East at the present time, to establish its headquarters in Baghdad.…

The British view some decentralization with favor. They think there should be more decentralization than now exists but less than what Aramco has agreed to. Their idea is to establish four main areas in the Middle East and to have an IPC managing director in charge of each who would report directly to London. The four areas would be Iraq, Syria, Lebanon and the Persian Gulf area. This new arrangement would differ from that now existing in that Tripoli as the regional headquarters in the whole Middle East would be eliminated. Discussions brought out that having Middle East operations directed from Tripoli is not a happy arrangement. One thing mentioned in this connection was the fact that it is difficult to bring non-Lebanese employees into the regional headquarters at Tripoli. As a side comment, Mr. Beckett said that this scheme of decentralization is a program that Gibson of IPC is trying to sell but has not yet sold to the partners in IPC.

Mr. Beckett inquired whether it is in fact true that a new oil discovery has been made in Iran about fifty miles south of Tehran. He said that he had noticed in the press that such a discovery has been made and that the initial well would make one thousand barrels per day. Mr. Eakens confirmed that a discovery has been made but the well made gas, oil and water, and it was not certain whether it was a commercial producer. He said that while it was possible that an important discovery had been made, this should be proved by the next well which, on the basis of the information gained from the drilling of the first three wells, should be located more nearly on the structure.

There was brief mention of the amendment in the Egyptian company law which permits major ownership by foreign nationals in Egyptian corporations. Mention was also made of the suspended negotiations between Aramco and SAG. Neither of these topics was discussed on any substantive basis.

Mr. Beckett observed that he had noticed that Turkey seemed to be interested in trying to get foreign companies to come there to engage in oil operations. On questioning, he agreed that Turkey was not a first-class prospect, that it would be a difficult and rugged country for an oil company to operate in, and that there would not be any rush of companies to Turkey.

1. This memorandum of conversation was prepared on Aug. 13.