Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

250. Telegram From the Embassy in France to the Department of State ¹

Paris, June 27, 1967, 1415Z.

20797. Subject: Petroleum: French Intentions in Mideast Crisis.

1) The following is our estimate of current French intentions in the petroleum crisis.

2) One long-time constant in French energy policy is to secure maximum energy independence. This is why France took steps to impose three month storage requirement, build up French flag tanker fleet, and invest heavily in Algerian oil, leaving her in much better position face current crisis than most other European countries. Embassy has previously reported French reluctance, in framing its long-term supply security plans, to take into consideration possible increased US production freeing Venezuelan, Mideast and Canadian oil for Europe.

3) Retention of as much independence as possible appears to be important element in current French attitude. Thus, initial French position special meeting OECD Oil Committee was non-participation, when French supply prospects appeared relatively favorable. French attitude toward cooperation began to change a few days later, when French realized that Libya and Iraq might not resume exports for some time, leaving France with 50 percent normal crude receptions for indefinite period. French appear to realize now that even if Libyan exports do resume in near future it may happen only gradually, and instability in Libya might result in second shut-down. Thus, the limits of French oil independence in current crisis are now clearly visible, and we may hope (unless consideration of high policies intervene) for corresponding degrees of French cooperation in OECD supply plans.

4) Another important element in French attitude of course has been to preserve her existing crude sources in Arab producing countries, particularly Algeria. However, Embassy as yet seen no indication of French intention to go beyond this consideration and use current crisis to poach on US–UK company concessions. Ensor of Mobil Oil regional office London recently called on us to discuss this point. Such an effort is indeed possible particularly on the part of ERAP, whose crude sources still almost exclusively Algerian; ERAP is heavily investing in worldwide oil exploration; ERAP also not as vulnerable to retaliation by the internationals as CFP. However, it is worth noting that from outset of crisis, French petroleum press has rejected “poaching”. Thus, knowledgeable daily bulletin De l’Industrie Petrolliere on June 14 stated French Government had no intention of breaking with other Western powers on petroleum, citing French refusal deal separately with IPC during Syrian pipeline crisis as example of France’s recognition of its real interests. Syndicated column by Joseph Alsop that French were after US and British oil elicited reply in Agence Economique et Financiere of June 21 that “According to official circles, ‘all that is madness.’” (Brunet said the same to us.) The odds at this point seem against the French undermining legal framework under which their companies have recently attained worldwide crude production greater than internal French consumption, in exchange for a shaky and vulnerable arrangement.

5) French sharing of oil specifically with other EEC countries appears unlikely without full resumption Libyan exports which would result in estimated 85 percent normal French crude receptions. French would then have some scope at least to fill in gaps until situation returned to relative normalcy, in pursuit of France’s special petroleum objectives within EEC. ERAP in particular controls much more crude than it has facilities to refine and market in France: in 1966, 17.4 million metric tons of crude production, but only 7.3 million metric tons of products refined and marketed by ERAP. Most of ERAP’s excess Algerian crude now sold (under compulsion) to internationals in France at posted price, while the rest exported, mainly to Germany, at considerable discount. Post-Libyan export situation may thus offer ERAP opportunity further to develop crude and product sales in Europe. In any event, French appear likely to use Mideast crisis, and especially problems of US and UK internationals, in arguing that aspects of highly regulated French national petroleum policy be adopted by EEC as part of its common energy policy.

Bohlen

1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 12–2 FR. Confidential. Repeated to London and Brussels.