354. Telegram From the Embassy in Iran to the Department of State0

8. Baghdad for Special Office. Prime Minister called me to his office July 1 to inform me of resolutions adopted by Fourth Conference of Organization of Petroleum Exporting Countries (OPEC) which being given to press today.1 Amini stated he wished to reassure me that GOI’s support resolutions in no way implied attack on oil consortium or suggestion oil agreement2 should be modified. He said relations between GOI and consortium were very good and Iran in fact had exercised moderating influence in OPEC councils in preparation of resolutions.

Prime Minister mentioned that Iran and Saudi Arabia had been designated to negotiate with oil companies to give effect to resolutions. He regarded this as favorable factor ensuring moderate approach. He pointed out this connection that negotiations need not be completed within specified time and that they would be conducted in unhurried and friendly spirit. Prime Minister also mentioned that Page3 of Esso had been previously apprised of content of resolutions in New York.

Essential points of resolutions call for (1) initiation “forthwith” of negotiations with oil companies to ensure that oil produced in member countries shall be paid for on basis of posted price no lower than that prior to August 1960; (2) development of formula whereunder oil royalty payments shall be fixed at “uniform rate” and shall not be treated as credit against income tax liability; (3) elimination by member countries of any contribution to the marketing expenses of the companies concerned.

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While Amini’s statement sincere and is encouraging insofar as GOI relations with oil consortium are concerned, it is clear that fundamental and far-reaching character of resolutions will have sharp impact on member companies of oil consortium as well as other segments of international oil industry.

Full text resolutions and press release follow by pouch.

  1. Source: Department of State, Central Files, 800.2553/7-262. Confidential. Repeated to Baghdad, Benghazi, Caracas, Djakarta, Jidda, Kuwait, London, and Tripoli. The source text bears the handwritten notation: “File. No Action. 7/9/62” by William Van Dusen (FSD).
  2. Reference is to the resolutions (IV-30-IV-36) adopted at the Fourth Conference of the Organization of Petroleum Exporting Countries in Geneva, June 4, made public on July 2. The texts are in enclosure 1 to airgram A-10 from Caracas, July 3. (Ibid., 800.2553/7-362)
  3. An agreement, effective October 29, 1954, between a consortium of eight U.S., Netherlands, British, and French international companies and the Government of Iran, which resolved the longstanding Iranian oil controversy, and signed by the Shah. See Foreign Relations, 1952-1954, vol. X, p. 1049, footnote 3, and p. 1053, footnote 1.
  4. Howard W. Page, Vice President of Standard Oil Company of New Jersey.