50. Telegram From the Department of State to the Embassy in Libya1

114592. Ref: Tripoli 1641.2 Subject: Posted Price Negotiations.

1.
Dept has consistently take position vis-à-vis all oil companies involved in Libyan problem that decisions regarding offers in posted price[Page 116]negotiations was matter for each company to decide for itself in terms its own best interests, taking into account its particular position in Libya and its interests elsewhere. Position of independent oil companies such as Occidental for example is very different in Libya and world-wide than that of major integrated international company such as Esso. If asked by any oil company we plan to maintain this position and we assume Embassy will also.
2.
We note that argument for accepting forced posted price increase in Libya under protest as means of avoiding pressure to increase posted price in Persian Gulf of course only applies to majors (Esso, Amoseas Group, and Mobil). A substantial de facto posted price increase in Libya would no doubt be followed by pressure to increase posted price in Persian Gulf in any event. Independents such as Oasis Group members might have more to gain by flexibility now since a negotiated posted price, whatever it might be, could be less or with less onerous conditions attached than a price established by fiat. To suggest independents not be forthcoming now in negotiations would appear less in their interest and more in the interest of the majors, and independents might later blame USG if events turn out badly.
3.
We are concerned by what appears to be emerging “Iraq mentality” on the part of majors (Tripoli 1557, para 7),3 namely to give in on issues only when forced, to disinvest, to keep others out of their concession areas as long as possible, and to maximize profits soonest. Such an attitude may not appeal to independents without production outside Libya such as Marathon, who have a greater incentive to remain in Libya for as long as possible.

End

Rogers
  1. Source: National Archives, RG 59, Central Files 1970–73, PET 14 LIBYA. Secret; Limdis. Drafted on September 16 by Clark (E/ORF/FSE) and Blake (AF/N); cleared in E/ORF/FSE; and approved by Blake.
  2. In telegram 1641 from Tripoli, July 14, the Embassy provided information concerning the ongoing negotiations between Libya and Marathon. (Ibid., PET 15–2 LIBYA)
  3. Dated July 2. (Ibid., PET 6 LIBYA)