Office of the Historian

886D.2553/8–354

No. 358
Memorandum by the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Jernegan) to the Director of the Office of Near Eastern Affairs (Hart)

confidential
[Washington,] August 3, 1954.

Subject:

  • Formation of New Kuwaiti Tanker Company

Mr. Proctor, Vice President of Gulf Oil Company, telephoned me this morning from Pittsburgh to report a new development in Kuwait. He said that the Acting District Manager of the Kuwait Oil Company, a Mr. Doyle, had received an official letter from Abdulla Mulla Saleh, who is a sort of “Secretary of State” to the Ruler of Kuwait, stating that a Kuwaiti tanker company had been formed, had purchased two old tankers of 11,000 tons capacity and intended to buy two other larger ships, and that it was desired to notify the Kuwait Oil Company of the availability of these vessels for charter. The letter added that for the time being the Director of the National Bank of Kuwait would act as General Manager of the tanker company.

According to Mr. Proctor, there was no intimation that this new company would be given any special privileges or monopoly rights for the carriage of Kuwait oil. There was likewise no indication that the new company had any outside interests or inspiration. Nevertheless, Mr. Proctor was concerned that this might be the forerunner of attempts to put pressure on Gulf and Anglo-Iranian to use the Kuwaiti tankers. He commented that 11,000-ton tankers were too small to be economic in this trade and that in any case Gulf had a number of its own tankers lying idle. It could not be expected therefore that Gulf would be interested in dealing with the new company.

[Page 843]

Mr. Proctor anticipated that Gulf would simply advise the Kuwaitis that their tankers must take their chances in the competitive field. He hoped Anglo-Iranian would take the same attitude. He expressed the view that it was important for the British Government to get to the Sheikh of Kuwait promptly and discourage him from supporting this new enterprise and especially to warn against the purchase of additional tankers which would simply become a liability.

I told Mr. Proctor that I agreed with his views and that we would communicate with the British on the subject. I added that in the case of the Onassis agreement in Saudi Arabia, we were taking a strong line to the effect that there could be no objection to the formation of a Saudi Arabian tanker company but that it must operate on a freely competitive basis.

Please prepare an appropriate instruction to London1 and, as soon as occasion offers, discuss this with the British Embassy here.

  1. Telegram 836 to London, Aug. 11, not printed, informed the Embassy of Proctor’s call and the Department of State position. (886D.2553/7–3054)↩