Office of the Historian

886A.2553/7–1554

No. 349
Memorandum of Conversation, by the Deputy Director of the Office of Near Eastern Affairs (Dorsey)

secret
[Washington,] July 15, 1954.1

Subject:

  • Onassis Agreement

Participants:

  • Mr. R. G. Follis, Chairman, Board of Directors, Standard Oil Co., Calif.
  • Mr. M. J. Rathbone, Director, Standard Oil Co., New Jersey
  • Mr. S. A. Swensrud, President, Gulf Oil Corporation, Pittsburgh
  • Mr. B. B. Jennings, President, Socony Vacuum Oil Co., New York
  • Mr. J. W. Foley, Vice Pres., The Texas Co., New York
  • Rear Adm. Thos. J. Kelly (Ret.), Washington representative, Socony
  • G—Mr. Murphy
  • NE—Mr. Dorsey

Mr. Murphy explained the Department’s serious concern over the Onassis agreement. He welcomed this opportunity to meet with the heads of the Aramco parent companies in order to obtain their individual ideas on a possible solution to the problem. Messrs. Follis and Rathbone outlined the problem facing the parent or shipping companies and expressed concern that they would be faced with a virtual ultimatum to use an Onassis ship any time within the next six weeks. Mr. Jennings reiterated the Company’s position as set forth to Mr. Jernegan several days before; viz. the parent companies would refuse to accede to the agreement and place cargo on any Onassis ship, although they realized the danger of subsequent shutdown and even possible nationalization.

[Page 828]

Further statements by members of the group brought out the following points: They wished to state their position openly to a responsible official of the Department in order to discuss it and make certain the Department had no objection to the position they were taking from the point of view of national interest. In view of the danger of imminent action by the Saudi Government, they asked the Department further to support their position by immediate diplomatic representations.…

. . . . . . .

Mr. Murphy replied that the Department shared the feeling of the companies that the agreement was a violation of its concession, and after discussion at high levels within the Department, it had been agreed that the companies’ position be supported by representations to the Saudi Government. The Department of Defense agreed with this course of action. We were now concerned with the best time and manner in which to advance our point of view to the King.

Mr. Jennings expressed gratification for the Department’s support. He said that although it had earlier been suggested that the Vice President go to the field to present our protests to the King, it was now felt that there were disadvantages to such a method and that the Department was better able to choose its own method.

Mr. Murphy stated that the Department’s inclination was to make use of the services of our Ambassador whom it considered highly qualified to carry out the mission. He then went on to say that the Department would attempt to get a cable into the Ambassador’s hands not later than the first of the following week, in which it would present its view and request that he take such action as he deemed most effective in presenting our position.

It was agreed that in general the companies would have no objection to the Saudi Government’s ownership of a tanker fleet, provided that its operations were conducted on a competitive basis in the regular free international market and that no rebates were involved. Mr. Jennings noted that although absolutely no cargoes could be guaranteed, he felt a reasonable amount of business would be supplied to such ships. In reply to a question by Mr. Dorsey, Mr. Follis stated that he knew of no other companies which would be affected by the Saudi decree, but after some consideration remembered that notice of the agreement had been presented to the Pacific Western. He expressed the opinion that the Saudi Government would not consider important any action by Pacific Western in view of its size. He said, however, that the next time he saw an official of the company he would inquire as to their position. Mr. Dorsey remarked that in view of the several parent companies involved it would be easiest to maintain one central point of contact [Page 829] and assume that Mr. James Terry Duce of the Arabian American Oil Company continued to be the principal avenue of communication. This was confirmed by the officers of the parent companies.

  1. This memorandum of conversation was prepared on July 20.↩