Mr. DOUGLAS. Without necessarily agreeing with everything that my good friend from Tennessee has said, I think he has performed a public service in calling attention to the big revenues which the rulers of the Persian Gulf states obtain from oil, and the profits which American oil companies make from that region. I was very glad that he quoted from the book, "The Middle East, Oil and the Great Powers," by Mr. Shwadran, because it so happens that I myself have been studying that book during recent days. It is my understanding that American companies--and I should like to have the Senator from Tennessee correct me if I am wrong-have 100 percent of the oil concession in Saudi Arabia. This is the Aramco Co., and it is owned by Standard Oil of New Jersey, Standard Oil of California, and Standard Oil of New York, plus the Texas Co. It is my further understanding that in the year 1955 they paid royalties of approximately $300 million to the King of Saudi Arabia, and retained as profits an equal amount, plus profits from the so-called tapline. Am I correct in that? Mr. KEFAUVER. Yes, I know the Senator is correct with respect to the ownership by the companies. I did have a table showing the exact amount King Saud received from the oil concession. My impression was that it was in the neighborhood of $250 million. Mr. DOUGLAS. I think that rose to approximately $300 million in the last year. Mr. KEFAUVER. Generally I fully agree with the Senator. Mr. DOUGLAS. Am I correct that in the final agreement which was made in Iran that the United States consortium of 5 companies took over 40-percent ownership of the Iranian fields, and that the British company, the Anglo-Persian Co., was left with approximately 40 percent, while the remaining 20 percent was given to the Dutch and France? Mr. KEFAUVER. I am sure those figures are correct. I gave the chart I had to the clerk, and I do not have it before me. Mr. DOUGLAS. At the moment the income from Persia or Iran to the international consortium amounts to not far from $150 million a year. Mr. KEFAUVER. The Senator is correct. Mr. DOUGLAS. And the prospects are that in the future, as the refinery at Abadan gets into full operation, profits will increase. Mr. KEFAUVER. That is correct. Mr. DOUGLAS. Am I further correct in understanding that a group of American oil companies, the same 3 Standard Oil companies, plus Gulf and Texas, plus 2 others, own 231⁄2 percent of the oil consortium in Iraq? Mr. KEFAUVER. The Senator is correct. Mr. DOUGLAS. There is also a mysterious area in that part of the world called the Sheikdom of Kuwait, which is little known to the world. Mr. Shwadran says that the revenues paid to the Sheik of Kuwait amounted in 1954 to $217 million. Mr. KEFAUVER. Yes; that is what it says in the book, and I understand that in 1956 the amount went up to $250 million. Mr. DOUGLAS. And there are only 170,000 people in the sheikdom of Kuwait. Mr. KEFAUVER. I understand there are 200,000. Mr. DOUGLAS. Am I correct in understanding that the Gulf Oil Co. owns approximately half of the concession in Kuwait, and the British interests the other half? Mr. KEFAUVER. Yes, it is owned 50-50 between American ownership and British ownership. Mr. DOUGLAS. I think it is Gulf which is the American company. Mr. KEFAUVER. It is Gulf, which in turn has subsidiaries here in the United States. Mr. DOUGLAS. Since profits, excluding pipeline profits, are split 50-50 with the local rulers, it follows, when we give figures for the royalties for local rulers, that the profits of the companies are at least in equal amounts. Is that correct? Mr. KEFAUVER. Equal or larger. Mr. DOUGLAS. They are at least of an equal amount. If it follows that the profits in Saudi Arabia are at least $300 million, that, on a 40-percent basis, the profits in Iran are at least $60 million, that, on a 50-percent basis, the profits in Kuwait are $108 million, that 23% of the Iraqi profits would be at least $60 million, from all those sources, so far as we can tell, the profits of the American companies in that area amount to not far from $530 million a year. Is that correct? Mr. KEFAUVER. Yes. I think the figures show something in addition to that amount, but the profits are at least that much. Mr. DOUGLAS. And the 5 companies that have the biggest interest are Standard Oil of New Jersey, Standard Oil of California, Standard Oil of New York, Gulf, and Texas, the 3 Standard Oil companies having a larger interest, in all places except in Kuwait, than Gulf and Texas. Mr. KEFAUVER. Socony Mobiloil has an interest. Mr. DOUGLAS. That would be Standard Oil of New York. Mr. DOUGLAS. I want to say I am not one who thinks this is necessarily bad. I am not one who charges that this influence is necessarily decisive in terms of American foreign policy, but it certainly should be taken into account as an important influence. In addition to the danger which the Senator from Tennessee has pointed out, is it not also true that these companies, in their anxiety to avert nationalization, would not wish to have the United States adopt any policy which would estrange the Arab States? Mr. KEFAUVER. That is entirely true. Undoubtedly one reason why they are so strong for this policy and program, and have worked so hard for it, is that they know that Mr. Dulles thinks there should be international intervention in the event of nationalization of some property which is invested with any international public functions. Mr. DOUGLAS. Is there not a further consequence? All the Arab States, and particularly Saudi Arabia, are very antagonistic to Israel. Mr. KEFAUVER. The Senator is correct. Mr. DOUGLAS. Does it not follow that the economic interest of these companies would be such that they would not want the American policy toward Israel to be one which would make the Arab States seriously angry at the United States, and hence increase the danger of nationalization? Mr. KEFAUVER. That certainly would be the case; and I think it is only fair to say that there has been a shifting of the position of the United States Government, from being fairly friendly with Israel before the present Administration came in, to one of greater friendliness toward the Arab nations, and less toward Israel since the new Administration has been in power. Undoubtedly that is following the line which international companies would want to see this Nation follow. Mr. DOUGLAS. In justice we should also say that in the past few days, under pressure from the country and the Senate, there has been something of a shift in the policy of the United States Government. This afternoon the United States advocated, on the floor of the United Nations, a policy which some of us have been urging for more than a month, namely, that there should be United Nations occupation of the regions controlling the Gulf of Aqaba and the Gaza strip. I hope this is final and that there is no more backing and filling on our part. Mr. KEFAUVER. Yes. Mr. DOUGLAS. Should not all this be added to indicate that public opinion still operates in a democracy, even though we may have a Department of State strongly prejudiced in a given direction? Mr. KEFAUVER. Yes; I think in fairness that should be stated. I am glad the Administration finally changed somewhat its position with respect to voting for sanctions against Israel; but undoubtedly a position of hostility was apparent some time ago. It was only because of great public pressure, and the position of many leading Members of the United States Senate, in my opinion, that a change of heart in the Administration was brought about. The Administration is to be complimented upon the change of position it has made. However, I think that does not change the basic point, namely, that this Administration does largely what the big international oil companies want. That is reflected in the changed position in connection with Israel and the Arab States from what was a very friendly position toward Israel. This Administration has reversed that position, and is more friendly toward the Arab nations. That fits exactly the attitude which the international oil companies follow. Mr. DOUGLAS. While not agreeing with all the implications in the statement of the Senator from Tennessee, and disagreeing with respect to some of the conclusion which he draws, I think he has performed a very valuable service in making this speech this afternoon. I wish to congratulate him. Mr. KEFAUVER. I appreciate the comments of my distinguished friend. He has been very kind to sit and listen all afternoon to this long discussion. Mr. MORSE. Mr. President, will the Senator yield in order that I may address a question to the Senator from Illinois? Mr. KEFAUVER. I yield. Mr. MORSE. The Senator from Illinois has made a very great contribution to this debate by the colloquy he has just had with the Senator from Tennessee in connection with the penetrating questions he has asked. The Senator from Illinois could make a further great contribution-because he is the best qualified Member of the Senate to discuss this point with the Senator from Tennessee-if he would discuss with the Senator from Tennessee, for a very brief time, the tax benefits which American oil companies get as a result of their Middle East operations. I wonder if the Senator from Illinois would direct the attention of the Senator from Tennessee to that subject. Mr. KEFAUVER. It is a very interesting subject. As the Senator from Oregon has said, no one is better able to give a brief summary of it than the Senator from Illinois, if he has the time to do so this afternoon. Perhaps he may wish to defer discussion of the subject until some later time. Mr. DOUGLAS. Mr. President, I intend to discuss that subject later. I do not wish to make premature charges, and I should like to reserve the subject for a later time, when a definitive analysis can be made. Mr. MORSE. That is entirely satisfactory. I wish the Senator from Illinois to know that I shall await the discussion with great interest, and I shall be the direct beneficiary of his discussion of that subject when he presents it in his speech. Mr. DOUGLAS. I thank the Senator. Mr. KEFAUVER. Mr. President, I yield the floor. APRIL 29, 1964. Hon. ROBERT F. KENNEDY, Department of Justice, Washington, D.C. DEAR MR. ATTORNEY GENERAL: It has been brought to my attention that the Department of Interior has negotiated a lease agrement between the United States and the Colorado School of Mines Research Foundation, Inc. This agreement, I am told, would lease to the Foundation the Anvil Points Experimental and Demonstration Facilities near Rifle, Colorado. It would reactivate research and experimental work to develop processes for the conversion of oil shale into oil. The lease agreement contemplates the simultaneous execution of a contract for the administration of the research and experimental program, utilizing the Anvil Points facilities by Socony Mobil Oil Company as project manager. It also anticipates a research agreement between Socony Mobil Oil Company and Humble Oil Company as "sponsor." It is also my understanding that the development of this important conversion process was commenced by the United States Government a number of years ago and that approximately $25 million of Federal funds have been used in this research, and further, that the process is within two or three years of completion. As Chairman of the Senate Antitrust and Monopoly Subcommittee, it is my concern that the results of Government research should not be utilized to increase the monopoly power of a small number of major oil companies. Certainly patents and the licensing of patents growing out of inventions discovered in this research and experimental program should be used, if possible, to increase competition in this area rather than limit it. That the Department of Justice has this same concern, I have no doubt. However, monopolization of the use of oil shale for the production of oil could result unless these agreements make provision for the use of such patents in a manner that would encourage competition in this industry. Would it be proper, therefore, for you to examine the proposed contracts, particularly the license and patent provisions, in order that the Department of Interior and the President may be apprised of any antitrust aspects involved in them. By letter I have also advised the Secretary of Interior of my concern that the antitrust aspects of the proposed contracts be considered prior to their execution. I would appreciate being informed of whatever analysis of the contracts you may make in the matter, particularly as it affects the antitrust ramifications. With kindest regards. Sincerely, PHILIP A. HART, Chairman. DEPARTMENT OF JUSTICE, Washington, May 8, 1964. Hon. PHILIP A. HART, Chairman, Antitrust and Monopoly Subcommittee, Senate Judiciary Committee, U.S. Senate, Washington, D.C. DEAR SENATOR HART: Your April 29 letter to the Attorney General refers to recent arrangements for private use of the Government-owned oil shale experimental facilities at Anvil Points, near Rifle, Colorado, with which this Division has been recently concerned, and has therefore been referred to me for reply. Your letter, written while the since-executed arrangements were still under consideration, expresses deep concern. You indicate the possibility of anticompetitive effects flowing from the agreement between the Colorado School of Mines Research Foundation, the lessee of the facilities, and Socony Mobil Oil Company as project manager, and the supplementary agreement between Socony and Humble Oil and Refining Company, which constiuted these two integrated companies as project sponsors. You therefore asked that we examine the contracts before their execution, to advise the Secretary of the Interior and the President of the antitrust aspects. As you may know, the contracts were executed before your letter was received. However, this Division was consulted on the final documents before their approval by the President. It appeared to us that the proposals posed several possible antitrust problems. These, however, could not be finally resolved prior to the execution of the agreements, since resolution depended largely on the course of conduct followed by the participants, the whole context of petroleum industry research, and the practical effect on other competitors of the arrangements. We therefore suggested that, if it were considered otherwise administratively desirable that these arrangements be consummated, antitrust's prime concern would be protected if care were taken to avoid any appearance that the participants were immunized from any appropriate antitrust enforcement action trying these issues subsequently after due investigation. Moreover, we proposed that all of the parties be made aware of the need to share as widely and equitably as possible the benefits of the program. The President's approval letter, published in the Congressional Record for May 1, 1964, at page 9502, follows our suggestion. It carefully preserves full opportunity for judicial determination of any antitrust offenses which might appear to require enforcement action. Further, it records his understanding that the benefits of this Government-aided research must be shared widely. In accordance with the President's purpose in making this reservation, you may be assured that this Division will carefully follow operations under this program, and undertake promptly such further action as might be required. Sincerely yours, WILLIAM H. ORRICK, Jr., Assistant Attorney General, Antitrust Division. APRIL 29, 1964. Hon. STEWART L. UDALL, Department of the Interior, Washington, D.C. DEAR MR. SECRETARY: It has been brought to my attention that the Department of Interior has negotiated a lease agreement between the United States and the Colorado School of Mines Research Foundation, Inc. This agreement, I am told, would lease to the Foundation the Anvil Points Experimental and Demonstration Facilities near Rifle, Colorado. It would reactivate research and experimental work to develop processes for the conversion of oil shale into oil. The lease agreement contemplates the simultaneous execution of a contract for the administration of the research and experimental program, utilizing the Anvil Points facilities by Socony Mobil Oil Company as project manager. It also anticipates a research agreement between Socony Mobil Oil Company and Humble Oil Company as "sponsor." It is also my understanding that the development of this important conver sion process was commenced by the United States Government a number of years ago and that approximately $25 million of Federal funds have been used in this research, and further, that the process is within two or three years of completion. As Chairman of the Senate Antitrust and Monopoly Subcommittee, it is my concern that the results of Government research should not be utilized to increase the monopoly power of a small number of major oil companies. Certainly patents and the licensing of patents growing out of inventions discovered in this research and experimental program should be used, if possible, to increase competition in this area rather than limit it. That the Department of Interior has this same concern, I have no doubt. However, monopolization of the use of oil shale for the production of oil could result unless these agreements make provision for the use of such patents in a manner that would encourage competition in this industry. Therefore, I would appreciate receiving from you copies of these proposed contracts. It would also be useful for me to obtain your interpretation of both the legal and engineering aspects of the patent and license provisions contained therein. By letter I have also notified the Department of Justice of my concern that the antitrust aspects of the proposed contracts be considered by the Attorney General prior to their execution. With kindest regards, Sincerely, PHILIP A. HART, Chairman. DEPARTMENT OF THE INTERIOR NEWS RELEASE, JANUARY 27, 1967 FIVE-POINT OIL SHALE DEVELOPMENT PROGRAM ANNOUNCED Secretary of the Interior Stewart L. Udall today announced a five-point action program to promote economic covery of shale oil and associated minerals from the rich oil shale resources of the Green River Formation in Colorado, Wyoming and Utah. It is estimated that known oil shales of the area contain the equivalent of about 70 times the present domestic proved reserves of crude petroleum. Steps leading to the program announced by the Secretary began in 1964 with the appointment of a distinguished group of private citizens to the Oil Shale Advisory Board. The Board's interim report, presented to the Secretary in February 1965, has been the subject of intensive and detailed review within the Interior Department during the past two years. The Secretary pointed out that mounting energy demands in the United States made it increasingly important to develop oil shale to the point where it can begin to make a contribution to meeting U.S. energy needs. The Secretary explained that the five-point program will involve the following: Action to clear title to public oil shale bearing lands of the three-state area. This will involve withdrawal of oil shale lands from all mineral entry other than for oil and gas leases, the initiation of examinations and contests to remove clouds on title arising from oil shale and other mineral claims, and restoration of sodium to withdrawn status except where the Secretary specifically finds out that particular sodium deposits can be extracted without damage to the oil shale resource. Pending sodium preference right lease applications will be promptly considered on their merits. A "blocking-up program" in which the Secretary will give consideration to applications from private owners of scattered oil shale lands to exchange part of them for Federal lands of similar quality as to mineral and other physical characteristics. The purpose of these exchanges would be to permit some consolidation of private holdings which are at present too scattered for efficient mining operations. Under this program the Secretary will consider applications for blocking only where the applicant agrees to a time schedule and investment commitments for the development of economic mining and recovery operations. Applicants will also be required to agree to develop the blocked up lands in accordance with the best conservation principles, both with regard to maximizing the mineral values to be recovered and to minimizing damage to the environment. As the third point of the Department's oil shale program the Secretary will announce procedures which will permit the Department to consider applications from individual firms and combinations of firms for provisional developmental leases of oil shale lands. Under this part of the |