77. Telegram From the Embassy in Libya to the Department of State1

123. Subject: Oil Situation.

I am deeply concerned re implications for Libyan oil situation of developments presently taking place in Iran. Original united Company strategy, as set forth in industry letter to OPEC members,2 was for “all embracing negotiation” leading toward simultaneous settlement “with all producing governments concerned.” We now seem to be heading toward a situation in which there may be not only separate negotiations with Persian Gulf producers but also, judging by Tehran 301,3 para 2d, a separate settlement in advance of an agreement with Mediterranean producers. I can see gravest dangers in situation for following reasons:
It will play right into Libya’s hands which has been core of our problem from beginning. Separate negotiations are what Libya is [Page 194] currently insisting on so that it can continue its whipsaw tactics and press non-OPEC demands.
It is likely to place independent producers here in increasingly vulnerable situation, result in their disillusionment and thereby undermine their resolve when unity of front so important.
It will lessen credibility of USG which clearly identified with original company decisions and strategy.
It would appear leave French high and dry with their Algerian problem.
I am sending these abbreviated views at this time because situation is moving so quickly that I am concerned that they may not otherwise receive consideration. At this point, I do not know what solution to this problem is, but I can only urge in strongest terms that if we are to abandon one strategy we be prepared quickly to put together another one that has chance of success and will be responsive to the problems we face with respect to Libyan supplies for Western Europe which, I assume, continue to be as important as USG, companies and European consumers have assumed all along.
Libyan independents will have to face LARG again on 24th. Oil industry should have its new strategy agreed by then.
Department please pass to Kuwait for Under Secretary.
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1271, Saunders Files, Middle East Oil, 1/1/71–2/1/71. Secret; Immediate; Nodis.
  2. See footnote 2, Document 68.
  3. See footnote 8, Document 74.