DEPARTMENT OF STATE
Memorandum of Conversation
Date: April 29, 1949
Subject: Sterling Oil
Participants: S/Mr. Acheson E/Mr. Nitze Mr. E. G. Collado, Standard Oil Company of New Jersey
Copies to: PED/Mr. Eakens S/S
Mr. Collado described the problems facing the American oil companies by virtue of the growing availability of sterling oil and the desires of one country after another to shift their procurement of oil from dollar sources to sterling sources. He also discussed the various possible solutions to the problem. He felt that a lower price for dollar oil than for sterling oil would not be a practicable solution. He said he favored increasing imports into the United States, but referred to the domestic political issues which would be raised by a rapid increase in such imports. He referred to the possibility of working out an arrangement with the British Treasury under which American companies might be permitted to trade in sterling oil, and pointed out that the British would undoubtedly insist on having any such transactions subject to control by the British Treasury. The Secretary said that he found it difficult to see how they could be requested to give such permission without agreeing to such control.
The possibility of transferring ownership of operations, such as Aramco and Tapline, to British registry was also discussed. The Secretary said that he would be strongly opposed to any such development.
Mr. Collado said that he was leaving shortly for London to discuss with Victor Butler of the Ministry of Fuel and Power the problems of his company. Mr. Collado feels that it will be impossible for the American oil companies to work out a satisfactory solution unless the U.S. Government intervenes in the situation directly with the British Government. The Secretary asked Mr. Nitze whether we were prepared for him to raise the matter with Sir Oliver Franks now. He replied that we were not quite prepared, but that we should be prepared shortly.
E:PHNitze:a