196. Telegram From the Department of State to the Embassy in Turkey1
2092. There are now six groups known to Department to be working on pipeline projects transiting Turkey to Iskenderun. Some groups (Allen–Reynolds, Iranian Oil Syndicate, Constantine–John Brown, and unidentified German) apparently have their focus on Iran as point of origin. Others (IPC–Texas–California–Gulf, and Fiat-Williams groups) have their focus on Iraq and Kuwait. Some of foregoing groups envisage initially or at later date a project involving network reaching to Iran, Iraq and Kuwait fields.
Limited information available here indicates widely different approaches to and concern with such problems as participation of foreign oil companies already in region, participation of foreign oil companies capable of assuring adequate marketing arrangements, participation of local interests (including governments), common carrier concept, size of pipeline, point of junction of Iraqi and Iranian sections with Turkish section, cost and method of financing, need for related international treaties, and need for US anti-trust protection for US participants.
Several groups have had separate talks with Turkish, Iranian and/or Iraqi Governments and several also report independent talks between Turkish and Iranian Governments. Both Turkish and Iranian Governments reported favorably disposed. British have approached Department on question of international treaty in connection with project and have also raised larger and long-range problem of movement Mid-East oil of which pipeline project is part.
Several groups (IPC–Texas–California–Gulf, Allen-Reynolds and Iranian Oil Syndicate) have made formal approaches to US Government. Others (Fiat–Williams) have only informally indicated interest and briefly outlined their plans.
It is not clear what will emerge from activities these various groups. Information generally lacking on status their negotiations. Among those known to be active at present time are Allen–Reynolds, Fiat–Williams, Iranian Oil Syndicate, and IPC–Texas–California–Gulf group. Latter group having meeting in London in mid-March and Socony–Jersey Standard of this group have indicated to Department that treaty arrangement is sine qua non to their proceeding with contract.
[Page 459]In principle, construction additional pipeline facilities, particularly as alternatives to existing facilities and from points that cannot be otherwise serviced, considered to be in US national interest and Department has already so informed groups that have raised question. Department prepared provide fuller guidance as situation develops. Meanwhile present Department thinking includes following considerations: (1) impartiality towards various US groups interested in project; (2) preference for private ownership and private financing of project; (3) preference for common carrier system which would be new in area but in line with US practice; and (4) prepared consider attempting negotiation of treaty with countries of transit, providing pipeline operating company appropriate protection.
When approached by Socony–Jersey Standard regarding attendance London meeting with IPC partners, Texas, Standard Oil of California, and Gulf, Department interposed no objections but said that as plans developed we would expect to be informed. Socony is aware of necessity of our consulting with Justice Department on antitrust aspects of problem. Department will so consult when appropriate on any project growing out of activities mentioned in this cable regardless of sponsorship.
Addressee posts requested to be alert to and promptly report on all future developments with regard to this or similar project. If approached you are authorized, except for treaty problem, to give substance Department views along lines set forth above.
- Source: Department of State, Central Files, 880.2553/3–957. Confidential. Drafted by Owen T. Jones and approved by Rountree. Also sent to Tehran, Baghdad, Rome, London, and Paris.↩