Consortium Nearing Agreement

Anthony Eden on Compensating AIOC (July 1954)

The Mossadegh Project | July 11, 2019                   

British Foreign Office | IRAN 1951-1954
Anglo-Iranian Oil Company (AIOC) Archive
Iran Oil Consortium | Archive 1953-1954


Copy No. 70

C.(54) 260
28th July, 1954



Memorandum by the Secretary of State for Foreign Affairs

British Foreign Secretary Anthony Eden The Consortium is nearing agreement with the Persians on the future operation of the Persian oil industry. The Anglo-Iranian Oil Company (A.I.O.C.) will, of course, have a 40 per cent share in the Consortium, and the other members will be paying them a sum of £214 millions over twenty years for the remaining 60 per cent share (this figure cannot at present be revealed).

2.      On compensation for such of A.I.O.C.’s losses as will not be covered by the above, the Persians have offered a net payment of £25 millions after A.I.O.C.’s claims and Persian counter-claims have been taken into account. The Board of A.I.O.C. have not yet considered this offer, but will be influenced by Her Majesty’s Government’s view of it.

3.      A.I.O.C. have asked whether, if they accept this offer or something near it, Her Majesty’s Government would agree that there should be included in the agreement an undertaking by A.I.O.C. to pay to Persia a sum of just under £50 millions, which Persia would have received if she had ratified the 1949 Agreement with A.I.O.C. This would be offset against A.I.O.C.’s claims and would not affect the net payment, but A.I.O.C. would thus avoid payment of United Kingdom income tax on this sum, worth approximately £25 millions.

4.      I ask my colleagues to agree that:

(a) Provided the Board of A.I.O.C. agree, H. M. Ambassador in Teheran [Roger Stevens] should be instructed to make a final attempt to get the Persians to offer a net payment of £30 millions but given discretion to accept £25 millions.

(b) Her Majesty’s Government should agree to A.I.O.C.’s proposal in paragraph 3 above provided that:

(i) the agreement is expressed in such a way that the total of Persian compensation is described as £75 millions payable over a period of years, A.I.O.C. undertaking to pay to Persia the £50 millions over the same period. This would have the advantage of making the nominal figure of compensation greater, and it could be made clear that payment of the Persian claim to £50 millions is dependent upon ratification of the new agreement with the Consortium;

(ii) A.I.O.C. obtain the agreement of their partners in the Consortium to this procedure

(iii) the Persians do not raise serious objection; and

(iv) if the agreement of all concerned is not obtained within the week, the A.I.O.C. will drop the idea and accept a straight payment by Persia of £30 millions or £25 millions as the case may be, without any mention of the 1949 Agreement.

A. E. [Anthony Eden]

Foreign Office, S.W.1.
        27th July, 1954.

[Annotations by Arash Norouzi]

Divvying Up the Loot: The Iran Oil Consortium Agreement of 1954
Divvying Up the Loot: The Iran Oil Consortium Agreement of 1954


Related links:

Status of Iranian Oil Negotiations | CIA Report (July 30, 1954)

John D. Jernegan on Iranian Oil Consortium Talks (May 1954)

Relations Between the Shah and Her Majesty’s Embassy at Tehran | Denis Wright (Jan. 1954)

MOSSADEGH t-shirts — “If I sit silently, I have sinned”

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