60. Memorandum of Conversation0

SUBJECT

  • Middle Eastern Oil

PARTICIPANTS

  • Mr. Herter, Acting Secretary
  • Mr. Dillon, W
  • Mr. Rountree, NEA
  • Representatives of American oil companies
  • Mr. Eugene Holman
  • Mr. J.W. Foley
  • Mr. Nickerson
  • Mr. Ralph Rhodes
  • Mr. Follis

The meeting took place initially in Mr. Herter’s office, was later adjourned to Mr. Dillon’s office, and finally, the representatives of the oil companies met with Mr. Rountree in his office.

The purpose of the meeting was to discuss generally the situation in the Middle East as it affects American oil interests. Representatives of the companies were particularly concerned lest Middle Eastern countries should endeavor to follow the lead of Venezuela in demanding revision of the 50–50 formula. They felt it imperative that American officials in the area be fully briefed with respect to the differences in the situations in the Middle East and Venezuela, respectively. Since operations in the Middle East under the 50–50 formula were based upon firm contracts, they thought it extremely important that American officials should emphasize their support for the “sanctity” of contracts. They were aware that the Department had sent out circular instructions to the various field posts, but they appeared to be concerned that the American representatives had not paid adequate attention to these instructions. They were pleased to be told that a circular telegram would be sent out to make certain that appropriate officers were properly briefed.1

The company representatives were also concerned with the forthcoming meeting in Cairo at which representatives of the Arab states [Page 215]would discuss petroleum matters.2 They said that, despite the possibility that the meeting would not in fact produce much in itself, individual country representatives might take the opportunity at that time to enunciate highly detrimental national policies with respect to petroleum. It might be possible that they would do so even though present difficulties among the Arab states render it less likely that the countries, particularly the UAR and Iraq, could get together on a unified petroleum policy. For this reason, the companies planned to have representatives as observers at the conference and they urged that the Department be adequately represented. They were told that we had not decided upon this question, but were giving thought to it. Even though officials might not be sent out especially for this purpose, we had highly qualified officers in Cairo who would, in any event, follow developments closely.

The company representatives referred to recent conversations which they had had in Iran, particularly with the Shah, concerning the consortium relationship with the GOI. They handed Mr. Rountree a copy of an aide-mémoire which the consortium representatives received in Tehran from the Shah, in which several requests were made.3 While the memorandum was in courteous language, and contained no threats, at the time it was delivered the Shah mentioned that Iran was interested in participation in the consortium, so that Iran’s share of the profits would be increased. It was not clear whether he had in mind paying for Iran’s participation, but presumably he did. The company representatives had the impression that the extent to which participation would be pressed might depend upon the extent to which the consortium was able to meet the requests set forth in the aide-mémoire.

  1. Source: Department of State, Central Files, 880.2553/3–1859. Official Use Only. Drafted by Rountree; approved by Herter on March 27.
  2. Not further identified.
  3. The Arab petroleum conference, April 16–23. As part of the White House Staff Notes No. 516, March 19, the President received a written briefing on the forthcoming Petroleum Conference. According to the Saudi Director for Petroleum Affairs, the note stated, the conference was crucially important because it would provide oil-producing states with an opportunity to stabilize world crude prices. The Saudi Director stated that Venezuela had agreed that a uniform-country pricing policy was necessary and he believed Iran also would join in a united front of price stabilization. (Eisenhower Library, Whitman File, Eisenhower Diaries)
  4. Not further identified.