Office of the Historian

311. Memorandum of Conversation0

October 27, 1960.

SUBJECT

  • Possible methods of dealing with Soviet oil export policies

PARTICIPANTS

  • Compagnie Francaise des Petroles:
    • Mr. de Metz, Chairman and Director-General
    • Mr. de Laboulaye, CFP adviser from French Foreign Ministry
    • Mr. van den Perre, CFP representative in North America
  • French Embassy:
    • Mr. Claude Lebel, Minister Counselor
  • Department of State:
    • Under Secretary Dillon
    • Mr. Turpin—U/CFA
    • Mr. Beckner—FSD

Mr. de Metz outlined the problems the producing companies have been having with the Middle East governments who need increased crude oil output and larger oil revenues. The companies have been doing all they can to increase output, but the general oversupply situation, combined with disruptive Soviet oil marketing policies, have made the problem of providing increased revenues almost insuperable by present methods. Mr. de Metz suggested two methods of approaching this problem. He thinks that European governments might fix quotas on the amount of Soviet oil they would import. The other device might be combined action by the large oil companies, including the U.S. companies, against Soviet oil exports. To be effective such action would necessitate a waiver of U.S. anti-trust laws so that the U.S. companies could cooperate with the European companies.

Mr. de Metz also expressed opposition to the international prorationing proposals of Tariki (Saudi Arabian Director General for Petroleum) and Perez Alfonso (Venezuelan Minister of Mines and Hydrocarbons).

Mr. Dillon said that the Department has been carefully studying Soviet oil export policies. He thought that the West could in time expect to have to deal with similar export methods in other commodities as the Soviet economy develops. So far as dealing with Soviet oil exports in an effective manner is concerned Mr. Dillon thought perhaps the only way would be by coordinated action of the governments affected. He pointed out that the types of joint action the oil companies [Page 652] would have to take in order to deal with the problem themselves would appear to involve marketing and price agreements which go far beyond any action they were permitted by U.S. administrative exemptions to take in the Iranian Consortium case and during the Suez emergency. Combined action in this broad field would no doubt require special congressional legislation. There is no possibility of such action for at least several months, but it is not beyond the realm of possibility that congressional action would be taken later if the matter were presented carefully by the next Administration within the context of the cold war.

Mr. Dillon stated also that although we do not favor an international prorationing scheme as proposed by the Organization of Petroleum Exporting Countries (OPEC), we have thought that there is a real likelihood that OPEC might be able to put through some such scheme. On the other hand, the U.S. companies with whom we have talked think that no such scheme can be worked out or administered.

  1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199. Confidential. Drafted by Beckner and approved by Eliot on November 9.↩