STATUS OF IRANIAN OIL NEGOTIATIONS*

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000300150004-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 21, 2016
• Document Release Date: July 24, 2006
• Sequence Number: 4
• Publication Date: April 17, 1999
• Content Type: MEMO

Approved For Release 2007/10/23: CIA-RDP91TO 1172R000300150004-6
IWO,
OCI No. 6256
Copy No. 15
TO: Deputy Director (Intelligence)
SUBJECT: Status of Iranian Oil Negotiations*
Ambassador Henderson reported from Tehran on 26 June that
the consensus of those having knowledge of the oil negotiations
was that "at least between two and four weeks as from today"
would be needed to reach agreement in principle and probably at
least two months after that to clear a final draft through the
Majlis.
While the discussions between the consortium negotiators
and the Iranian representatives appear to be making progress on
basic issues, two related problems are receiving considerable
attention on an intergovernmental level.
1. British-Iranian Discussions on Compensation:
Concurrently with the consortium-Iranian discussions,
the British embassy at Tehran and the Iranian government
have'been endeavoring to negotiate the matter of compensa-
tion to be paid as a result of oil nationalization in Iran.
Henderson says this matter has become most difficult and
potentially critical in the over-all negotiations; to Iran-
ians it is a problem of first magnitude. He feels they
would regard any appreciable payment of claims to AIOC "as
an exaction of tribute under force of their present circum-
stances rather than equitable compensation for net damages
sustained by AIOC since 1951."
State Dept. review completed
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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Approved For Release 2007/10/23: CIA-RDP91T01172R000300150004-6
 Approved For Release 2007/10/23: CIA-RDP91T01172R000300150004-6
Prior to the opening of negotiations in April, the
American and British governments were understood to have
agreed that the maximum compensation demanded would be
about $280,000,000 with the combined engineering valuation
of the Kermanshah refinery and Naft-i-Shah oil fields--be-
tween $30,000,000 and $40,000,000--as a minimum.
In Ambassador Henderson's opinion, a demand now for the
maximum amount would have a most serious effect on the con-
sumation of a final consortium agreement; if an agreement
is achieved, a shadow would be cast over its durability.
Apparently the Iranians have been told by the British ambas-
sador that substantial compensation must be paid and they
understood that this request was supported by the United
States. Henderson and Herbert Hoover, Jr. believe that any
Iranian agreement to pay compensation in excess of about
$42,000,000 would provoke serious consequences.
2. Iranian Guarantees of an Oil Agreement:
The British government persists in its hope that an
arrangement can be evolved whereby a bilateral exchange of
notes would assure the implementation of an oil settlement.
London has proposed the following procedures to which the
United States and Dutch governments appear to have agreed:
(1) the British government would propose a unilateral ex-
change of notes between Britain and Iran if a British hold-
ing company is established; (2) the Dutch government would
exchange guaranteeing notes with Iran if the operating com-
panies are Dutch; (3) the British and Dutch governments
would both propose such an exchange of notes; and (4) if
Iran will not agree town exchange of notes obligating only
Iran, the idea would be dropped.
The reported Soviet agreement to release to Iran 11 tons
of gold and goods worth an estimated $8,000,000 may stiffen
the Iranian attitude in the oil negotiations. Although the
income to Iran from a Soviet settlement is in no sense com-
parable, and an oil agreement would be a long-range benefit,
the Iranian negotiators will probably consider any improve-
ment in Iranian-Soviet relations as a trading point.
HUNTINGTON D. SHELDON
Assistant Director
Current Intelligence
Approved For Release 2007/10/23: CIA-RDP91T01172R000300150004-6