260. Telegram From the Department of State to the Embassy in Iran1
Washington, March 2, 1968,
0807Z.
123602. Subject: Iran Oil.
- 1.
- Fulmer, Texaco, McDonald, Mobil, Hedlund, Esso New York, and Clark, Esso London Office, called on Eliot at their request March 1, to review oil situation Iran.
- 2.
- Point of meeting was to ensure that Department informed why companies had to reply negatively to requests for larger offtake or cost oil. Re offtake companies cited extraordinary recent increases from Iran, especially in 1967, limit to size of overall market for ME crude, and competition from other areas that cannot be ignored. Re cost oil, companies said that since GOI not investing any capital or paying royalties, supply such oil would be tantamount to partial expropriation. Furthermore, oil to bloc countries, oil surplus area, would push out oil into consortium sales area and bloc may in any case be within consortium sales area in future. Giving in to Iran would also result in similar demands from other countries. Companies pointed out their strenuous efforts to find solution to Shah’s demands and had made progress; this should be appreciated.
- 3.
- Important other points emerging were a) companies not asking USG/HMG intervention at this time, just keeping us informed, and b) there is some confusion as to whether GOI demands for $5.9 billion oil revenue over next five years includes revenue from other companies as well as consortium. Eqbal, both in October and in his recent letter, has said that the 5.9 figure applied to consortium only; however Shah told Bridgeman in early January, and consortium reps on January 31, that figure includes all oil revenues, and Fallah recently said same thing to reps in US.
- 4.
- As to future steps, Clark said companies hopeful Shah will want to talk further. Consortium had not yet decided whether or not to send written reply to Eqbal letter, but sentiment in favor of keeping disagreement oral growing among members.
- 5.
- CFP reported to be “as responsible as anyone” for consortium rules, solidly behind decision not to sell cost oil, and relented only at last minute to allow additional refinery throughput. Nevertheless, CFP “oil hungry” and wants all the oil it can get.
Rusk
- Source: Department of State, Central Files, PET 6 IRAN. Confidential. Drafted by Walter M. McClelland (NEA/IRN), cleared by Akins, and approved by Eliot. Repeated to London and Paris.↩