117. Telegram From the Department of State to the Embassies in All OECD Capitals1

42129. Subj: Petroleum: Aramco Accepts Participation Principle. Ref: State 40217 (Notal); State 38469.2

Parent companies of Aramco have advised Department that Aramco President Jungers informed Saudi Petroleum Minister Yamani, on March 10 in Beirut, that company prepared accept principle of twenty percent participation in Aramco, as requested by King Faisal.3 Aramco however reserved its position on timing, compensation, amount of compensation, disposition of government’s share of production, future financing requirements, and desire for assurances for future.
Aramco decision has come after failure of owners’ efforts, through appeal to King Faisal, to block Yamani’s participation push. Faced with King’s insistence that companies accept principle of participation, and some indication that Saudis prepared to show flexibility on terms, companies apparently saw no choice but to accede. They secured agreement of other international oil companies in meeting of London Policy Group on March 9 in New York. They also agreed to inform major consuming governments immediately after giving letter to Yamani.
Although long and perhaps bitter negotiations remain with Saudi Arabia and other oil producers, Rubicon has been crossed. While it obviously impossible to predict how companies’ new course will work out, we consider their decision was correct and that they have chosen least undesirable alternative open to them.
Yamani agreed to make press announcement March 11 before opening of OPEC conference in which he, speaking as Saudi Oil Minister, would announce companies’ decision and state that complicated negotiating process due to start soon. Companies will also release press statements in New York. Yamani told Jungers that Council of Ministers had already arranged OPEC resolution; it unclear whether it will now be changed to reflect new Aramco position.
Next AramcoSAG meeting tentatively set for March 18. Jungers informed Yamani, and latter accepted, that companies would be prepared only to discuss agenda for subsequent meetings.
  1. Source: National Archives, RG 59, Central Files 1970–73, PET 3 OPEC. Secret. Drafted on March 10 by Brown; cleared in NEA/ARP, AF/N (in substance), EUR/RPE; and approved by Katz. Repeated to USEC Brussels, USNATO Brussels, Algiers, Beirut, Dhahran, Kuwait, Jidda, Djakarta, Benghazi, Caracas, Lagos, and Tripoli. Printed from an unsigned copy.
  2. In telegram 40217 to Jidda and London, March 7, the Embassy reported that Aramco owners were preparing to send a letter to the Saudi Government advising that they would accept Faisal’s principle of 20 percent participation. (Ibid.) In telegram 38469 to all OECD capitals, March 8, the Department summarized the status of the OPEC-oil company negotiations. (Ibid.)
  3. As reported in telegram 771 from Jidda, March 7. (Ibid.)