Office of the Historian

59. Telegram From the Department of State to the Embassy in the United Kingdom1

Washington, October 14, 1970, 2230Z.

169579. Subj: Middle East Oil. Ref: State 159023.2

1.
Eric Drake, Chairman of British Petroleum, called on Assistant Secretary Trezise October 13 to discuss effect of Libyan oil settlements on upcoming negotiations with major Middle East oil producing countries.3
2.
Drake said with ill-concealed hostility that it was really the fault of the US Government that oil companies had felt forced to give in to Libyans. He said Europeans would have gone along with a hard line by the oil companies with Libya, even at the cost of a shutdown in Libyan production and draw down of European stocks to low levels, if only the US Government had been willing to explain to the Europeans that all this was really in their best interests. He said Lord Home understood these matters and had been willing to back the oil companies with the Europeans. Making such explanations to the Europeans was of course the job of the USG and HMG.
3.
Drake said oil companies will now be forced to increase tax and royalty payments in the Persian Gulf, which will make North African oil even more valuable to Europe in comparison with Persian Gulf oil, and this will set off another round of Libyan demands for more taxes. The spiral could be endless he said.
4.
Drake said to minimize problems in the future we should make arrangements to discuss oil developments with HMG.
5.
Trezise responded he strongly disagreed with Drake’s analysis of the Libyan negotiations; that Libyans had been holding all the cards; and that we could have had little influence over Europeans had they decided to put pressure on oil companies or to act directly with oil producing countries to safeguard security of their own vital oil supplies. However, Trezise said we would be glad to meet with British to discuss matters further.
6.
No date for such a meeting was mentioned.

End.

Rogers
  1. Source: National Archives, RG 59, Central Files 1970–73, PET 6 LIBYA. Secret; Limdis. Drafted by Clark; cleared in E/FSE; and approved by Trezise. Repeated to Dhahran, Kuwait, Jidda, Tehran, Tripoli, The Hague, Paris, Bonn, Rome, USEC Brussels, USOECD Paris, and Algiers.↩
  2. See footnote 2, Document 56.↩
  3. An October 13 memorandum of conversation of the meeting is in the National Archives, RG 59, Central Files 1970–73, PET 6 LIBYA.↩