245. Briefing Paper Prepared in the Department of State1
SUMMARY OF MIDDLE EAST PIPELINE PROJECT
Background:
The interested international petroleum companies have held two meetings in London in recent months relating to the proposed new major pipeline system which would extend from the Persian Gulf to an outlet on the Mediterranean. The most recent meeting was held May 13–16, 1957. A summary report prepared by the companies for answering inquiries is attached together with a statement of consensus of opinion relating to important aspects of the project.2
At the recent conference the companies decided to set up a continuing study group to give attention to the intricate technical, financial and legal problems involved in the project. The proposed system would supplement and not replace the use of existing transport facilities. It is anticipated that [in] the first stage the project would transport approximately 800,000 b/d (barrels a day) through one 38/40” line; ultimately the project would be increased to 1,400,000 b/d to 350,000 b/d. The cost of this first phase is estimated at $550 million; the total project approximately $980 million.
[Page 546]The companies represented were as follows: American Independent Oil Company, the Atlantic Refining Company; Compagnie Francaise des Petroles; Getty Oil Company; Gulf Oil Corporation, Hancock Oil Company; Richfield Oil Corporation; San Jacinto Petroleum Corporation; Signal Oil and Gas Company; Socony Mobil Oil Company, Inc.; Standard Oil Company of California; Standard Oil Company (New Jersey); The Standard Oil Company (Ohio); The Texas Company; Tidewater Oil Company; Royal Dutch Shell; and The British Petroleum Company Limited.
Action taken by US companies:
Mr. Rathbone, Standard of New Jersey, together with executives of other interested companies, informed the Department May 24 of the London meeting and action taken. The following were stated to be the most urgent problems requiring attention:
- 1.
- A determination that participation of American firms in the project is acceptable to the Justice Department. (This is something of a major problem because the US Government has a suit pending against the principal US participants. The Department hopes that by the inclusion of two groups of independent companies this problem may have been surmounted.)
- 2.
- Negotiation of an overall treaty. (Preliminary US views on a treaty are in a separate paper.)
- 3.
- Financing. This is essentially a problem for the companies. The Department understands that it is their desire to finance the project with sterling funds.
Action taken by US Government:
Following conclusion of the May meeting, the Department instructed our Missions abroad to bring to the attention of appropriate authorities in Ankara, Baghdad, Tehran and Jidda the results of companies’ conversations in London; to inform them that the companies plan to approach the local Governments shortly to inform them on certain questions in which they may be interested. It was pointed out that the U.S. Missions in discussing this matter with local officials should take care to point out that firm decisions regarding the project were dépendent on the results of continuing studies; that the route and terminal of the new system was not yet decided; that the completed project may involve more than one route and terminal; that the proposed system will serve as a supplement to existing transportation facilities, providing flexibility for the export of Middle East oil; and that apart from this project, individual companies have under study other means of transporting Middle East oil. The Department has not been informed of the results of conversations to date. It is understood that the chiefs of U.S. and British missions have been in consultation with one another on this project.