“The Maximum Benefit For Iran”
Joint Statement By Howard Page and Ali Amini

The Mossadegh Project | November 20, 2018                                                   


Following the Iran Oil Consortium Agreement, the State Department published this press release in their August 16th bulletin. The first, a joint statement between and Iranian Finance Minister Ali Amini and Howard Page of Standard Oil of New Jersey, was “Issued at Tehran on Aug. 5.” The second is a shorter individual statement by Howard Page.



JOINT STATEMENT
BY GOVERNMENT OF IRAN AND
OIL CONSORTIUM


Dr. Ali Amini, Chairman of the Iranian delegation, and Mr. Howard Page, chairman of the negotiating group, representing the consortium companies, jointly issue the following statement in connection with the current oil discussions:

The Iranian Government, the National Iranian Oil Company and the negotiators representing a consortium of 8 oil companies have reached accord on necessary points of an agreement which will restore the flow of Iranian oil to world markets in substantial quantities. An essential part of the consortium agreement was settlement of the question of compensation to Anglo-Iranian Oil Company. A separate announcement has been made in this respect.

The agreement must now be put into proper legal form, approved by the Board of Directors of the participating companies, and signed by the parties concerned. It will then be submitted for enactment as part of the law of Iran and for formal approval of the Shah. It is estimated that these requirements can be concluded in about two months, after which large volumes of Iranian oil will once again be loaded at Iran’s great oil ports at Abadan and Bandar Mashur bound for the consuming and refining centers of the world. In the interim period, preparations for resumption of activities will commence.

Two operating companies will be formed to operate the oil fields and refinery. These companies will receive the necessary rights and powers from the government and the National Iranian Oil Company and exercise them on their behalf to the extent specified in the agreement. The consortium companies will pay the National Iranian Oil Company for all the oil required for export and sell the crude and products exported. Provision is made for the National Iranian Oil Company to take crude oil in kind, in lieu of payments, up to 12 percent of total exports. Products for consumption within Iran will be available to the National Iranian Oil Company at substantially their cost. The agreement covers a period of 25 years, with provisions for three 5-year extensions.

Through payments to National Iranian Oil Company and application of Iranian tax laws it has been estimated that total direct income to Iran from increased scale of operations for the first 3 full years, following a starting up period of 3 months, will be 150 million pounds on the basis of present prices and costs. The estimated figures begin at 31 million pounds for the first full year of operation, increasing to 67 million pounds for the third.

The National Iranian Oil Company will continue to operate the Naft-I-Shah oil field and Kermanshah refinery to produce a part of Iran’s own oil needs, and will continue to handle the distribution of oil products in Iran.

The National Iranian Oil Company will also be responsible for all facilities and services not directly a part of producing, refining, and transportation operations of the operating companies. These will include such functions as industrial training, public transport, road maintenance and facilities such as housing, medical care and social welfare. The National Iranian Oil Company will be reimbursed for a major part of the cost of such facilities and services by the operating companies, with whom close cooperation will be maintained.

Production of crude oil from Iran, following a starting up period of three months, will be increased progressively, bringing total exports of crude and products to a minimum of eighty million cubic meters (78 million tons; 500 million barrels) for the first three year period. In addition some five million cubic meters will be produced for internal consumption. Following the third year it would be the policy of the consortium companies to continue taking quantities of crude oil which would reasonably reflect the supply and demand trend for Middle East crude oil, assuming favorable operating and economic conditions in Iran.

Large scale operations at the Abadan refinery will be resumed as quickly as possible. It is expected that, again following the initial period of three months a total of nearly 35 million cubic meters (30 million tons; 220 million barrels) of crude will be processed for export during the first three years of operation. Of this, some 15 million cubic meters (13 million tons; 94 million barrels) will be processed during the last three years, a rate which will once again establish Abadan’s output as the largest in the Eastern Hemisphere, despite sharp increases in refinery capacity in that area during the last three years.

The two operating companies will be organized by the consortium and will carry on operations in Iran within a specified area. One of the companies will deal primarily with exploration and production, the other with refining. The companies will be registered in Iran and have their management and operating headquarters there. They will be incorporated under the laws of the Netherlands. There will be seven directors of each company, two of whom will be named by Iran and five by the consortium. Operating data and records of the companies will be available to Iran and the National Iranian Oil Company.

The consortium is expected to consist of the Gulf Oil Corporation, Socony Vacuum Oil Company Incorporated, Standard Oil (New Jersey), Standard Oil Company California, the Texas Company, the Anglo-Iranian Oil Company, Compagnie Française de Petroles and Royal Dutch Shell.


STATEMENT BY HOWARD PAGE, CHAIRMAN
OF THE INTERNATIONAL CONSORTIUM


We are very glad to be able to say that we have now agreed with the representatives of the Iranian Government and the National Iranian Oil Company on all necessary points of an arrangement under which Iran will resume a place among the principal oil producing nations. We must now return to report to our respective companies. Several of us will return here soon, however, to consult with the lawyers who will be working out details of the necessary formal texts.

Before returning here, I will stop in London for a few days to join in discussions which will be going on between the companies in the consortium, who must now conclude a separate agreement among themselves covering their participation. They will also formalize the status of the consortium by the establishment of a company there to handle its necessary corporate functions.

This arrangement is unique, and there have been many particularly difficult questions to settle. We believe they have been resolved in good spirit and with fairness to both sides. I want particularly to express my respect to Dr. Amini, who was a brilliant, capable and tough negotiator. He and his colleagues have squeezed the maximum benefit for Iran out of every point. They have been fair at all times, though, and we have maintained good humor even at the most difficult times.

The companies represented here have approached our problems at all times in a sincere desire to find acceptable answers. In many cases they have submerged their individual interests, at a time when both crude oil production and refinery capacity are at potentials greater, on a worldwide scale, than present market requirements, in order to make it possible for Iran to restore to its economy the benefits of its oil industry.

The basis has been laid here, in a friendly and cooperative spirit, for a long-term relationship which we believe is equitable and constructive for both sides. All of us hope sincerely that this agreement will contribute durably to the economy and security of Iran and the other nations affected.

• Source:
The Department of State Bulletin
Vol. XXXI, No. 790 • Publication 5564
August 16, 1954


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Related links:

Pres. Eisenhower and the Shah Trade Compliments After Iran Oil Deal (Aug. 1954)

Sec. Dulles Congratulates Abdollah Entezam, Zahedi on Iran Oil Deal (Aug. 1954)

Paid In Sterling: Text of Joint British-Iranian Statement (Aug. 5, 1954)



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