Attached is Flanigan memo for President which Hoskinson and Hormats
should staff ASAP.
Attachment
Memorandum From the President’s Assistant for
International Economic Affairs (Flanigan) to President Nixon
Washington, May 25, 1972
Subject:
- Possible Oil Discussions with the Shah in Tehran
Attached at Tab A is an April 27 memorandum describing the continuing
discussions between the Shah and the Oil Consortium regarding the
terms of Consortium’s concession. The Consortium, which controls
virtually all of Iran’s oil production, is 54 percent British, 40
percent US and 6 percent French. The Chairman of the Consortium’s
discussion group is Ken Jamieson of Esso.
Jamieson last met with the Shah on May 22 and 27 and was unable to
resolve the basic issue of agreeing to provide the government oil
company with oil at cost.
However, negotiations with the Shah remain on a good basis with the
next meeting scheduled for mid-June. [Page 2] An oil industry team presented the OPEC oil
producing countries a new offer in Geneva on May 23 which was
rejected. The progress in the OPEC
talks could affect the outcome of the Consortium’s negotiations.
If oil is brought up in your discussions with the Shah, I recommend
that you:
- (A)
- Express your understanding that both sides are working
toward an equitable and long-lasting relationship.
- (B)
- Express satisfaction at the substantial increases in
Iranian oil shipments in 1972 and the proposed doubling of
those shipments over the next few years, with the resulting
increase in in revenues for Iran.
- (C)
- If asked for special access to the US market for Iranian
oil, point out the great difficulties that granting special
access to one counntry would cause us in our relations with
all other oil exporting countries.
- (D)
- Indicate that you are aware of the discussions between the
National Iranian Oil Company and several private US oil
companies regarding joint ventures in the Caribbean and the
US.
[Page 3]
Tab A
Memorandum From the President’s Assistant for
International Economic Affairs (Flanigan) to President
Nixon
Washington, April 27,
1972
Subject:
- Possible Oil Discussion With the Shah in Tehran
The Consortium of Foreign Oil Companies controlling all
production and refining of oil in Iran is currently in extended
negotiations with the Shah. The negotiating team is headed by
Ken Jamieson, Chairman of Standard Oil of New Jersey, even
though European companies control 67 1/2 percent of the
Consortium.
To date they have agreed to (1) raise liftings of oil from Iran
to 8 million barrels per day by October 1976 (from approximately
4 million b/d in 1972); (2) construct a $100 million natural gas
liquids plant; (3) construct a 200,000 b/d refinery and give the
existing Abadan refinery to Iran to provide for domestic
consumption.
The Shah’s initial insistence on access to the U.S. market has
been successfully refused by Jamieson. The agreements reached to
date are good ones from both the Shah’s and the Consortium’s
points of view.
[Page 4]
It is essential that the Shah not be encouraged in his desire for
access to the U.S. market for Iranian oil. Such access would
make our relations with other Persian Gulf countries, as well as
with Venezuela, extra-ordinarily difficult, and would make
imposssible the already difficult task of managing the mandatory
oil import program. You did indicate sympathy for this policy to
him during his visit to Washington in 1969. If the Shah brings
up oil relations, you might say that you are pleased to hear
progress is being made in the discussions with the Consortium.
You could indicate particular pleasure that the Consortium’s
projected lifting of oil from Iran on favorable terms will reach
by 1972 the maximum amount supportable by Iran’s current proved
reserves. If the Shah brings up access to the U.S. market, you
might point out the great difficulty that granting access to one
country would cause us in our relations with all other oil
exporting countries.
Next meeting between the Shah and the Consortium negotiators will
be on May 22, 24. Jamieson will inform me of any significant
developments in those meetings.
