800.6363/1653a: Circular telegram
The Secretary of State to Certain American Diplomatic Representatives 24
The following regarding the preliminary exploratory petroleum discussions with the United Kingdom which were completed in Washington on Wednesday, May 3 is for your confidential background information and for such use as in your discretion may be appropriate in conversations with government officials.
Since it had been previously agreed that definitive understandings between the two Governments would be effected at Cabinet level, all conclusions reached in the preliminary discussions were on an ad referendum basis. The measure of agreement however was very large and it is anticipated that the tentative understandings reached in these technical discussions will be ratified by the respective senior committees.
The two Delegations agreed on certain broad principles under which Anglo-American foreign oil operations should be conducted. These principles are summarily as follows:
- 1.
- That ample supplies of petroleum shall be available in international trade to all peace-loving countries at fair prices and on a non-discriminatory basis, and that petroleum resources, in which their nationals hold rights, shall be developed to this end;
- 2.
- That petroleum development operations shall be conducted with a view to the sound economic advancement of producing countries;
- 3.
- That the principle of equal opportunity to acquire new exploration and development rights shall be respected by both Governments;
- 4.
- That both Governments and their nationals shall respect all valid concession contracts and rights lawfully acquired thereunder;
- 5.
- That no restrictions inconsistent with the broad purpose of developing ample supplies shall be imposed by either Government or its nationals.
During the discussions these principles were discussed thoroughly and in great detail. Pending specific problems were fully canvassed and there was a genuine meeting of minds with respect to applicability of the principles to such problems.
It was agreed that as soon as practicable both Governments would take action looking toward the negotiation of a multilateral agreement among interested producing and consuming countries. To this end, the two Governments, in consultation with other governments, would formulate plans for a petroleum conference to consider such an agreement.
Meanwhile, to implement the agreed principles, the two Governments would create a Joint Petroleum Commission which would be charged with the responsibility of estimating long range world demand for petroleum and suggesting the manner in which this demand may best be satisfied by production equitably distributed among producing countries. The Joint Commission would also recommend policies the adoption of which by operating companies would effectuate the suggested production programs. Finally, it would consider short term problems of production, transportation, refining and distribution wherever the nationals of either country have a significant interest and would make appropriate recommendations. The proposed Commission would not have executive power or functions. Its operations would be confined to recommending to the two Governments broad production and distribution policies.
The Department believes that the discussions have had a satisfactory outcome and that, if the draft Memorandum of Understanding which incorporates the foregoing is adapted, a most constructive step will have been taken in the direction of post-war economic cooperation.
- Sent to Canada, China, and Egypt for repetition to Jerusalem, Iraq, Iran, Lebanon and Syria, Saudi Arabia, the Soviet Union, and the United Kingdom. On May 10, the Ambassador in the United Kingdom was instructed to repeat the circular telegram to the representative near the Netherlands Government in Exile. On May 12 the same circular telegram was sent to Brazil, Colombia, Ecuador, Mexico, Peru, and Venezuela.↩