JI,{I
MEMORANDUM FOR:
TI{E
FRO}yI:
PETER TLANIGAN
SUBJECT:
Mid-East Oil Issues
1.
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The us nor,',r obtains a srnal1 pcrcentage of its oil recr,uirernents frorn the Middle Ea.st; in 19?i., impoi'ts from Midd-le fla.st anci- Arab Nortlr African nations cotnprisedLL^'770 r-rf total US oil impor.ts and 2"970 of total us oii consumption. on the oiher hand, imports from these sources are rising anctr ivith ?0% of known Free l&rorlii oil reserves located in this regi.on, it is o}:rrj.ous that long-range US energy policy must take accoun{: of tire strategic irnportance nf I\{ideast oil to the OtrC} nations incluciing the United Stetes.
2. Iran is Lloth an irnl:crtant oi.L produciirg naticn and a kev prr;.litieal aliy in tliis turbulent region, hut the us lias equ.aliy impcrtaitt oi]" interests iu the Arab world, principa)"1), in Saucii Arabia and Kurvait. Baseci on i9?0 National Fetroleun: Ct':uncil clata, toial proveci oi1 reserves were: Iran, ?0 }:ilU.on l:)arrels; Kurvait, 67 bii]"ion l:arrei,s; Saudi Arabia, 130 hiltion i:arrels; (United States, 3? l:illi.on; Venezuela, L4}:illion; and Cana<la, 11 bi}lion)" The St"ate Fepartinent beLieves these figures understate Saridi reservo-c a.nd also notes tirat US compani.es harre si.gni{icantiy greater oil i"irvestments in tLre Persian Gulf r:ations ($1. i l:illion) than in trran (9330 inii}ion). Future Iranian production wonld l:e limited to B mj.li.ion l*rarrels per da.v, based on current prorred oil reserves; while cnrrent projections of Saudi Arabian production do not reacl:" a reserve limitation.
3. US oil pol.icy rvhile mj.nimizing the dependence on Arab sources, relies most ireavi.ly on the friendl;g countrj.es" Of total. t9?1 oil imports, Sand-i Arabia supplied 3.2570, Iran 2.970, Libya l.3o/0, Kurvait L"AVo, and lraq 0.3% (Canada 200/0, Venezu.ela 30" ?9'b), These figures do not include substantial residual fuel oil imports from Caril:bean refineries which rely predorninantly on Venez.uelan crtide oil. Reproduced at the Nixon presidential Library
DECLASSIFIED
This docurnent has been reviewed pursuant to Executive order 13526 and lras been dete.nined to be declassifled.
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Our policy has been to atternpt to control the actions of the radical oil nati.ons by denying them rnarkets for their oil. The current nr.echauism for implementing this strategy is a consortium of international oil corr.panies and companies olned by oil consuniing nations such as France and Italv. The US has encouraged uris consortium to take a.ctjcxr designed to pu-nish the radical Ara.hs economically and thus to stabilize oi1 politics throughout the Arab rvorld. To th.is end, the Department of Jus{.ice has given the compa.nies limited antitrust imrnunity to negotiate collectively with the pr:oclucing countries.
5.
Regarding trra.n, the oil compani"es ancl the Sha.h have reached an agreement on the future development of lr:anian oi1 tirat is a rnajor plus in our oil relations with the Midclle l{ast. This agreelnent, r,rhic}r is of course very beneficial to lran, looks to the develoilment of Middie Hastern oil in a directir:n diametrJ"cally opposed to that take:r by the other oil producing countri.es, ?he ne'uv pattern of relationship rvith lran does not include ciire et goyernme:rt olrrnership, but is sufficj.ently favorable in oiirer ways t.o rnake utlnecesrlar;r 11r* g::anting of preferential treatrnent of Iranian oil under the U,S qucta syst.em.
Reproduced at the Nixon Presidential Library
DECLASSIFIED This docurnent has been reviewed pursuant to Executive Order 13526 and has been detennined to be declassified.