Foreign Relations of the United States, 1958–1960, Near East Region; Iraq; Iran; Arabian Peninsula, Volume XII

91. Memorandum of Discussion at the 460th Meeting of the National Security Council⁰

Washington, September 21, 1960.

[Here follows a paragraph listing the participants at the meeting.]

1. Western European Dependence on Middle East Petroleum (NSC Action No. 2080;¹ Memos for NSC from Executive Secretary, same subject, dated March 26, 1959,² and June 28, 1960;³NSC 6011;⁴ Memos for NSC, same subject, dated August 9 and 29, and September 19, 1960⁵)

Mr. Gray introduced the subject to the Council. (A copy of Mr. Gray’s Briefing Note is filed in the Minutes of the Meeting and another copy is attached to this Memorandum.)⁶

At the conclusion of Mr. Gray’s presentation, the President said he had received the most glowing reports on the prospects for petroleum production in Libya. He had been told that the Libyan reserves exceeded even the Sahara reserves. He asked whether Mr. Gray had available an estimate of possible oil production in Libya. Mr. Dulles remarked that the latest estimates on Libyan oil production were not quite as optimistic as the estimates which were current a year ago. The President said reports he had received indicated that Libya had a great oil field and would receive huge amounts of money from oil production.

Mr. Gray said the Libyan oil field was expected to produce 250,000 barrels per day in 1965 compared to a production of 375,000 barrels per day in Mexico, 250,000 in Brazil, 450,000 in Tunisia, and 3,350,000 in Venezuela. The President asked whether figures for Algeria were available. Mr. Gray said Algeria was expected to produce 560,000 barrels per day in 1965.

Secretary Mueller said he had recently been in Libya and had talked with oil experts in that country. In his view, the Libyan oil field had reserves in excess of present estimates. Mr. Randall said he leaned toward Mr. Dulles’ estimate rather than toward the estimate just mentioned by the Secretary of Commerce. He had recently talked with oil experts at our Embassy in Libya and had concluded that the Libyan oil field had substantial but not tremendous reserves. He remarked that the oil companies operating in Libya were being required to make a selection of the acreage they would exploit and to release the remaining acreage for redevelopment by other companies. Secretary Mueller thought this last requirement was responsible for pessimistic reports on Libyan oil reserves. Secretary Dillon agreed, adding that the oil companies were pushing ahead with production in Algeria but were holding back in Libya.

Mr. Gray then reported on the formation last week of the new Organization of Petroleum Exporting Countries, with Saudi Arabia, Iraq, Iran, Kuwait, and Venezuela as members. The purpose of the Organization was to control production and prices. What impact it will have on the world oil picture remains to be seen. The President said that as far as the Middle Eastern countries in the new Organization were concerned, anyone could break up the Organization by offering five cents more per barrel for the oil of one of the countries. Mr. Dulles said that the five countries represented 80 per cent of the oil reserves in the world and half of the oil in world trade. Egypt had not been invited to be a member of this Organization because it was thought Egypt would not collaborate with Iran due to Iranian-Egyptian tension over Israel. The President said he thought Egypt had no oil in any case. Mr. Dulles agreed that Egypt had very little oil; however, the country was interested in oil questions because of the Syrian pipelines. He said that Venezuela intended to seek Soviet cooperation with the OPEC, taking the line that Soviet price cuts will hurt the underdeveloped countries. Secretary Dillon thought this Venezuelan initiative would be helpful. It had been demonstrated in the past that the USSR was responsive to protests from underdeveloped countries.

The National Security Council:⁷

a. Noted and discussed the progress report on the subject transmitted by the reference memorandum of June 28, 1960, together with the accompanying letter from the Director, Office of Civil and Defense Mobilization, and the views of the Treasury Department on the progress report, transmitted by the reference memorandum of August 9, 1960; in the light of the views of the Joint Chiefs of Staff, transmitted by the reference memorandum of September 19, 1960.

b. Reaffirmed NSC Action No. 2080–b.

c. Agreed that where appropriate the United States should continue and, if necessary, increase efforts with foreign governments to encourage investment of private capital for petroleum development which would assist in achieving the objectives of NSC Action No. 2080–b.

d. Agreed, in the light of progress already achieved toward the objectives of NSC Action No. 2080–b, to rescind the Note to NSC Action No. 2080, with the understanding that any Council member may request a progress report should circumstances change.

Note: The actions in b, c and d above, as approved by the President, subsequently referred to the Director, OCDM, to coordinate the implementation thereof in collaboration with the Departments of State, Defense, the Treasury, the Interior, and Commerce.

The action in d above, as approved by the President, subsequently transmitted to all holders of NSC Action No. 2080.

[Here follow agenda items 2–6. For text of agenda item 2, “Petroleum Development in Free World Countries,” see volume IV, pages 640–645.]

Marion W. Boggs

0. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Boggs.
1. See vol. IV, p. 615, footnote 9.
2. See Document 65.
3. In this memorandum, Lay transmitted the first annual progress report by OCDM on development of free world energy resources outside the Near and Middle East. Gray’s briefing to the NSC, which summarized this progress report, is printed in vol. IV, pp. 647–648.
4. Document 90.
5. In these memoranda, the Executive Secretary transmitted to the NSC the text of the draft action and Treasury and JCS comments on the draft. (Department of State, S/P–NSC Files: Lot 62 D 1, Middle East Petroleum, Western European Dependence on, Act. 2080)
6. See footnote 3 above.
7. Paragraphs a–d and the Note that follows constitute NSC Action No. 2302, approved by the President on October 5. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)