GTI files, lot 57 D 155, “NSC”
No. 413
Memorandum by the Consultant to the
Secretary of State (Hoover) to the Secretary of
State
top secret
[Washington,] January 21, 1954.
Subject:
- Iranian Oil Situation
- 1.
- The Iranian oil situation must be considered in its world-wide setting, rather than as an isolated problem.
- 2.
- The Western and the Eastern Hemispheres are each essentially self-supporting and self-contained, at the present time, with respect to their petroleum requirements.
- 3.
- In the Eastern Hemisphere, the American companies already have a substantial surplus of production, and desire to participate in the Iranian situation only to facilitate the objectives of national security as set forth in the NSC action of January 14, 1954.
- 4.
- In the Western Hemisphere there is also a surplus of petroleum, and there is some fear that existing imports may threaten the stability of the industry. Still further imports from the Middle East at this time, therefore, are not in the interest of maintaining a strong defense position in the Western Hemisphere.
- 5.
- In future years the importation of Middle East crude to the US may be necessary, and sources of supply in that area for additional American companies are desirable. This may have to be handled separately from the Iranian problem due to the complexities already existing in these negotiations.
- 6.
- It is therefore desirable, for the present at least, that Iranian oil
should flow primarily into its traditional Eastern Hemisphere markets,
and should not add to the present difficulties in the Western
Hemisphere. Companies participating in an Iranian settlement should, if
possible, be in a position to:
- (a)
- Distribute Iranian oil in the Eastern Hemisphere, and
- (b)
- Proportionately reduce production from other areas in the Middle East. The five United States companies now named in the Cartel antitrust case are the only ones from this country who meet such a criteria, and it is for these reasons that the legal difficulties have had to be resolved.
- 7.
- Two major matters of negotiation still remain to be worked out,
namely:
- (a)
- The relative participation of the companies making up the consortium. This involves difficult problems of prestige between the British and Iranian interests, and
- (b)
- A contract between the consortium and the Iranian Government. This must not only be a sound agreement in itself, but must [Page 907] also set no precedents which would have injurious repercussions in other producing countries in either Hemisphere.
It is expected that the negotiations will now shortly get under way.