OIL: Negotiations in Iran

When Iran’s ailing Premier Mohammed Mossadegh was in the U.S. last year, he met W. (for William) Alton Jones, president of Cities Service Co., the twelfth-biggest U.S. oil company. Three weeks ago, on Mossadegh’s personal invitation, “Pete” Jones hustled to Iran, looked over the Abadan refinery, nosed around the oilfields. What was Jones up to? Last week Jones would say only: “My job isn’t yet finished.”

Jones is an old hand at rescue work in the sort of expropriation trouble afflicting Britain’s giant Anglo-Iranian Oil Co. When the Mexican government expropriated U.S. oil properties in 1938, Cities Service’s holdings, all still unexplored, were grabbed along with the rest. But in 1948, Cities Service became the first big U.S. company to make its way back into Mexico.

Last week the Wall Street Journal said flatly that Jones’s job in Iran was to buy 100,000 bbls. of oil a day for Cities Service. The Journal pooh-poohed Anglo-Iranian Oil Co.’s threats that it will sue anyone who tries to market the oil. Said the W.SJ.: “Some oilmen think the British case wouldn’t stand up in U.S. courts.” Most U.S. oilmen found such a proposition hard to believe. Jones is too shrewd an operator to take on Great Britain, the U.S. State Department and Anglo-Iranian all at once. Furthermore, Cities Service does not have the spare tankers or refineries, now working at capacity, to handle an extra 100,000 bbls. a day.

Best guess of oilmen was that Jones was trying to work out a deal to get Iranian oil not only for Cities Service but for a group of U.S. oil companies and Anglo-Iranian. The larger U.S. companies can use more crude and have the tankers to transport it. While Anglo-Iranian has shown no disposition to cut any outsiders in on Iranian oil, U.S. oilmen think it may be the only hope left for a solution that would save face all around.