Foreign Relations of the United States, 1969–1976, Volume XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970

128. Telegram From the Consulate General in Dhahran to the Department of State¹

Dhahran, August 31, 1969, 1300Z.

782. Ref: Jidda 3009.² Subj: ARAMCO Offtake Problem.

1. ARAMCO VP Jungers has provided account meeting with Yamani and Musa’ad reported reftel.

2. Jungers told Musa’ad revenue forecast for next SAG fiscal year down $39 million from earlier forecast ($997 million instead of $1,016 million.) These tidings precipitated frank remarks by Musa’ad who engaged in long deliberate monologue about entire question. He opened by saying that over years ARAMCO has been a most helpful force in Saudi Arabia. The company has done many things for the country, often at its own initiative and without promptings from the government. The whole history of the ARAMCO–SAG relationship has been one of trust and mutual confidence. The situation is changing he claimed. SAG is asking for help and ARAMCO is unable to comply and also unable supply convincing answers as to why it cannot.

3. Musa’ad said he convinced ARAMCO’s performance is a reflection USG policy and ARAMCO is in fact a “tool” of USG. Jungers denied this was true. Musa’ad replied he would like to believe this but found it difficult do so. Musa’ad then was more specific. Firstly, he said, actions and policy Iran detrimental Arab interests. The Shah is mistrusted by Arabs but he is in fact aided and abetted by USG. The oil companies gave into Shah’s pressure over Iranian offtake despite their knowledge Shah’s performance largely bluff. He could attribute this largely to USG efforts on Iran’s behalf. Secondly, he alleged, Saudi offtake problem contrived by USG in order reduce SAG ability make payments to UAR and Jordan, purpose being put pressure on Arabs come to terms on Middle East problem and get Suez Canal opened without necessity putting muscle on Israel.

4. Jungers endeavored counter these points but found it difficult dispel what appear to be ideas firmly implanted in Musa’ad’s mind. Jungers said it clear Musa’ad expressing what he sincerely believes and this is main point. Jungers also concludes that Yamani staged meeting so that Jungers could hear these views firsthand. Yamani has outlined seriousness with which SAG views offtake problem to ARAMCO in past and he probably wished Jungers clearly understand that Yamani has difficulty in getting ARAMCO points home within inner SAG circles.

5. Jungers convinced Musa’ad’s views reflect those of King Faysal himself on offtake problem and that Saudis will not bargain on this issue. Once their mind made up on course of action they will not be easily diverted.

6. Later when Yamani and Jungers alone Yamani reminded Jungers that ARAMCO reserves greatest in world and said if ARAMCO fails respond in satisfactory manner ARAMCO will lose concession as company now knows it and ARAMCO’s favored position. He did not go into specifics. Jungers can only believe that lurking in Yamani’s mind is SAG action which would take away from ARAMCO oil fields not now producing or producing far below capacity. There would be companies willing to take these concession areas over and they likely be non-American.

7. Jungers commented that ARAMCO relations with SAG deteriorating as result offtake problem. ARAMCO itself faced with economic realities oil marketing situation and there no easy way out. But if some solution satisfaction to SAG not forthcoming ARAMCO expects very troubled days may be ahead.

Adams

1. Source: National Archives, RG 59, Central Files 1967–69, PET 6 SAUD. Confidential; Limdis. It was repeated to Jidda.
2. In telegram 3009 from Jidda, August 31, the Embassy reported that Yamani and Musa’ad told ARAMCO representatives that the projected offtake increase was inadequate. Eilts noted that Saudi expenditures were going up, the government was feeling financially pinched, and that the Saudis believed the shortfalls in estimated offtake were the result of ARAMCO parent companies giving preference to marketing Iranian oil. Eilts concluded that ARAMCO parents were “not sufficiently alive to growing Saudi dissatisfaction on this score.” (Ibid.)