Office of the Historian

891.6363/12–446: Telegram

The Acting Secretary of State to the Chargé in the United Kingdom (Gallman)

secret
u.s. urgent
Washington, December 4, 1946—7 p.m.

8023. For Loftus and Rayner.35 Harden discussed proposed Standard NJ–Socony-AIOC pipeline from Persian Gulf to Mediterranean with Clayton and Henderson yesterday who tentatively told Harden Dept perceived no objection to project. Henderson felt domicile of pipeline company should be US unless there are commercial considerations to contrary and Harden promised not to agree to domicile elsewhere without further consultation with Dept. Line would have capacity 15 million tons annually. Percentage participation would be Standard 40, Socony 10, and AIOC 50. According to Druitt,36 Am companies would purchase 134 million tons crude oil over 20-year period to be supplied by AIOC from Iran and/or Kuwait for delivery Mediterranean terminus proposed pipeline. Line would also be available as common carrier for Gulf Kuwait production to extent free capacity.

Brit informed PED yesterday that Brit Govt had informed AIOC it had no objection to project subject to further clearance of route, terminus, and currency problems, and provided American companies have cleared with State Dept. Your views urgently desired. Particularly, do you think that to prevent any possible future misunderstanding Standard should confirm discussion with Clayton and put matter up to Dept in letter for written reply.

Brit also inquired whether Gulf-Shell proposed marketing agreement had been taken up with Dept. Their approval this project also contingent upon Dept clearance. Gulf has not consulted Dept and we are inclined simply to inform Brit to this effect leaving matter to be raised with Dept by Gulf. Proposed agreement is for 10 years with quantities involved starting at 1 million tons annually and rising [Page 44] probably to 10 million. All costs would be pooled and profits divided equally. Shell would undertake to transport, refine and market in Eastern Hemisphere oil supplied by Gulf from Kuwait.

Your views also desired proposed handling this case.37

Acheson
  1. Messrs. Loftus and Rayner were in London for informal discussions on oil questions of mutual interest to the British and American Governments.↩
  2. Charles E. H. Druitt, Assistant Petroleum Attaché of the British Embassy.↩
  3. On December 6, Messrs. Rayner and Loftus advised the Department that they had informally told the British they saw no objection to the proposed pipeline but would have to await their return to Washington for complete details and Department clearance before giving approval. They also stated that the Gulf-Shell transaction was apparently not an urgent matter and could await their return for detailed discussion (telegram 9948 from London, 891.6363/12–646).↩