Standard Makes Another Deal

U.S. oil interests last week bought another pile of chips in the game to exploit the rich oil pools in the Middle East. Standard Oil Co. (N.J.) and Socony-Vacuum Oil Co. made a deal to buy "substantial quantities" of Persian oil from the British Government's Anglo-Iranian Oil Co. This deal came soon after Jersey and Socony had decided to acquire 40% of the Arabian-American Oil Co.'s vast concessions in Saudi Arabia (TIME, Dec. 23) for some $250,000,000.

The Pipelines. The agreement with the British company may also cost Jersey and Socony big money. Anglo-Iranian tentatively plans to build a new pipeline from the Persian Gulf to the eastern Mediterranean. Jersey and Socony will probably pay for the pipeline, because the British have neither the ready cash nor the equipment. The two new lines which the British-controlled Iraq Petroleum Co. is building, paralleling their existing lines from Kirkuk to Haifa and Tripoli, have already run into construction snags. The principal trouble is that British steel mills cannot make anything larger than 16 1/2-inch pipe, and only three miles of that a day.

Jersey and Socony are already dickering with Arabian-American for part ownership in another line. Arabian-American has projected a pipeline from the mainland opposite Bahrein Island to the Mediterranean, either to the Haifa area or the long way around to Alexandria.

The Markets. By their two deals Jersey and Socony hope to get more oil at once to supply European markets; plenty of oil in the future from Saudi Arabian fields. Anglo-Iranian can well use the dollars the U.S. deal will bring in. The shipping and distributing facilities of the U.S. companies will also mean that Anglo-Iranian will be able to market all the oil it can produce. And both British and U.S. companies are getting together to meet possible competition from a new entry into the field--Russia. Her new concession in Persia, which has yet to be approved by the Persian Parliament, is only 300 miles from British-and U.S.-operated fields.

The Trouble. Despite all these careful plans, oilmen know that Middle Eastern oil can be fully developed only if the strife between the Jews and Arabs is soon settled. Arabs have been tearing up Iraq pipelines, in anti-British flare-ups. At the moment, they would probably tear up U.S. pipelines with even greater eagerness. And the Jews in Palestine, athwart the pipeline outlets, accuse the British of supporting Arab demands for the sake of oil.

Caught between the two factions, oilmen have become suddenly aware that they must have a foreign policy of their own. The old policy of ruthless exploitation must go. Many an oilman thinks that a considerable part of the oil wealth must be used in the future for company-sponsored hospitals and schools in Persia, Iraq and Arabia. Talk of a new foreign policy already seemed to be paying dividends. This month shrewd old King Ibn Saud of Saudi Arabia will make his first state visit in 13 years to Arabian-American Oil Co.'s installations in Dhahran.

This file is automatically generated by a robot program, so reader's discretion is required.