Foreign Relations of the United States, 1969–1976, Volume XXXVI, Energy Crisis, 1969–1974

101. Telegram From the Department of State to Certain Diplomatic Posts¹

Washington, December 22, 1971, 2323Z.

229809. Subject: Oil: Nationalization of BP Libya. Ref: State 224928 Notal.²

1. British Embassy has informed us that HMG will make formal démarches in OECD capitals to urge maintenance of common oil consumers’ front toward Libyan nationalization of BP. Noting that BP intends take legal action against any purchasers of nationalized oil, British will ask OECD governments to use influence with their oil companies and refiners not to accept blacklisted oil.

2. Action addressees should, on appropriate occasion, inform host governments that USG supports above mentioned British position. However, this matter should be handled with great delicacy. We wish to do whatever we can to deter nationalizations of oil producing properties but at same time wish to avoid possible situation developing in which some other producing countries might conceivably support Libya against an effort by consuming countries to discourage use of oil from nationalized properties. We believe that consuming nations can best assure their long-term interest in stable and reasonably priced petroleum supplies through support of viable relationship between oil companies and producing states. If Libyan nationalization and marketing of nationalized BP oil condoned by OECD states, result would be to magnify negotiating and price-fixing power of producing nations. If countries were to accept Libyan-marketed oil, they might gain short run price advantage for relatively small quantities available from ex-BP concession, but future cost likely to be increased ability of producers to dictate price, and greater insecurity of supply.

3. OECD governments should be aware we making this approach in confidence and do not plan any public press statements.

4. For Jidda, Kuwait, Tehran, and Dhahran. We do not wish to inform Gulf producer governments of specific action we are taking in OECD capitals. If host governments ask you, however, about USG position on BP nationalization you are authorized state that we trust they share our regret that oil should be used as political weapon in this or any other case. End.

Rogers

1. Source: National Archives, RG 59, Central Files 1970–73, PET 15–2 LIBYA. Confidential. Drafted on December 20 by Brown; cleared in NEA/IRN, NEA/ARP, AF/N, E/ORF/ICD, EUR/BMI, EUR/RPE, U, and D; and approved by Katz. Sent to USOECD Paris, The Hague, Bonn, Rome, Paris, Tokyo, and Madrid. Repeated to USEC Brussels, Beirut, Dhahran, Caracas, Lagos, Kuwait, Manama, Jidda, Tehran, London, all other OECD capitals, and Algiers.
2. See footnote 3, Document 99.