The Department of State Bulletin
Vol. XXXI, No. 809 • Publication 5703
December 27, 1954

The Department of State announced on December 7 that the five American oil company members of the Consortium, which recently concluded an agreement with Iran for the production and sale of Iranian oil,¹ are prepared to transfer, at cost, a portion of their participation to other American oil companies which meet certain requirements. This is in line with the understanding reached last year, when the possibilities of an agreement between Iran and the Consortium were first considered, that it would be desirable to provide an opportunity for additional American oil companies to participate in the Consortium in the event negotiations between Iran and the Consortium reached a successful conclusion. The agreements which have been executed make it possible to carry out that understanding.

The agreement between the Imperial Government of Iran and the National Iranian Oil Company, on the one hand, and the Consortium of eight oil companies, on the other, became effective October 29, 1954. The Consortium members also entered into agreements among themselves, effective the same day, relating to their respective share percentages in the Consortium, including the minimum amount of crude oil and refined products each will take or pay penalties for failure to take, capital outlays, the conduct of operations, and the like. Under these agreements, five American oil companies, namely, Gulf Oil Corporation, Socony-Vacuum Oil Company, Inc., Standard Oil Company (New Jersey), Standard Oil Company of California, and the Texas Company, each acquired an 8 percent interest in the Consortium.

The agreements provide, among other things, that within 6 months from October 29, 1954, the five American members of the Consortium may each transfer up to one-eighth of its participation in the Consortium to one or more other established American oil companies (or to an American company formed by such other companies) which satisfy the requirements specified in the agreements (paragraph 21, Participants Agreement). Important requirements are that each additional participant possess sufficient responsibility to, and does, assume its proportion of the obligations arising under the agreements and that the Government of Iran give its consent in writing to the transfer of an interest to such company. If transfer is made to more than one eligible company, such companies will be treated for all the purposes of the agreements as a single participant and will be required to appoint a common agent to act for all of them in all matters relating thereto, provided that each such eligible company will have the right to dispose freely and individually of its share of Iranian oil. If applications by eligible companies exceed the total which is available for subscription, such companies also will be expected to agree among themselves as to the portion which each is to subscribe.

The right of the five American members of the Consortium to make transfers under this provision of the agreements will expire April 29, 1955. In view of the desirability of securing the judgment of a qualified and disinterested party on the responsibility of applicants and in view of the time element involved, any established American oil company interested in acquiring a participation in the Consortium should file certain information with Price Waterhouse & Company on or before January 22, 1955. General information as to the cost and other obligations incident to participation, together with an outline of the information which should be filed with Price Waterhouse & Company, can be obtained from that firm at 56 Pine Street, New York, N.Y. Price Waterhouse & Company will not publish the name of any company supplying information or divulge the information supplied. The firm will, however, determine whether any interested company possesses the responsibility to undertake the obligations required to be assumed in connection with the participation it seeks.

For any company found by Price Waterhouse & Company to possess the required responsibility, the Department of State will lend its facilities in obtaining a determination as to whether the Iranian Government would be willing to approve such company as a participant in the Consortium.

Each such company that meets the necessary requirements will then be afforded an opportunity to study the agreements involved before deciding whether or not it desires to acquire an interest. The companies which decide to acquire an interest will be expected not later than April 1, 1955, to agree upon the manner in which they will be organized and be represented in the Consortium. Thereafter, the five American members of the Consortium will arrange, in conjunction with such companies, the transfer of interest.

¹ BULLETIN of Aug. 16, 1954, p. 230.