891.6363 AIOC/2–547

The Chief of the Petroleum Division (Loftus) to the British Petroleum Attaché (Jones)

My Dear Mr. Jones: This letter will confirm our conversation of January 3 with reference to a possible agreement of the companies involved not to drill in the territory in dispute between Saudi Arabia and Qatar. The Arabian American Oil Company considers itself unable to adopt any course but to look to the Saudi Arabian Government for delimitation of the territory in which the company must undertake drilling operations, and to be guided by the SAG in all questions involving such delimitation of that territory. Officials of the company have, therefore, taken the position that they cannot agree to refrain from drilling in territory which might be subject to dispute with some other state, or to enter into a commitment specifically to [Page 643] notify the Department in advance of beginning drilling operations in such territory. They further stated that, while it was their intention to keep the Department informed concerning their drilling programs as a matter of general policy, such information was not to be considered as being supplied for the purpose of obtaining clearance, because they felt that none was required and that any objections the Department might have on political grounds to particular drilling locations would have to be conveyed by it to the SAG.

With respect to the territorial waters of the Persian Gulf, the situation is somewhat less clear. The Arabian American Oil Company has indicated that it would be willing to delay for a reasonable time any contemplated drilling in territory that might later be subject to dispute, provided there was some prospect of a general settlement of the boundary and other questions certain to develop. They recognized that what constitutes territorial waters of the respective riparian states and what are the respective rights of those states in the sub-sea resources of the Persian Gulf beyond the limits of territorial waters are as yet undetermined; and that it would be in the interest of all concerned for these questions to be settled in advance of possible disputes. They feel, however, that if the matter is not otherwise to be settled, one method of promoting early action toward this end would be to precipitate the issue by initiation of drilling operations. The Department is not persuaded, however, that this is a desirable course and would appreciate being advised whether the British Government is prepared to reconsider the decision tentatively taken at London to resolve such matters on an ad hoc basis. The Department would welcome early conversations designed to disclose a feasible basis for general settlement of these questions.

Sincerely yours,

John A. Loftus