Evening star., 1944-02-06
U.S.. toConstruct
Petroleum Line
Across Arabia
1,250-MiIe Project
Will Supply Fuel
To Mediterranean

Secretary Of Interior Ickes an
nounced last night that. this
Government will build a petro-
leum pipe line from the Persian
Gulf area to the Eastern Medi-
terranean, indicating that the
United States has taken the first
step toward establishing a post
war and wartime fuel supply for
the American Navy in the Medi-
terranean.
The pipe line, to cost between
s130,000,o0 and $l65, 900, 900, will
provide an outlet for large Ameri-
can-owned oil reserves near the
Persian Gulf area in Saudi Arabia
and Kuwait, where the United
States has monopoly rights on the
petroleum reserves.
Mr.. Ickes said the line, estimated
to be 1850 miles long, will top re-
serve of 1000, 100000 barrels of oil
for use by the American Army and
Navy ION very favorable terms He
made the announcement as presi-
dent of the Petroleum Reserves
Corp, which serves as contractual
agent for the Government in the
agreement.
The development, Mr.. Ickes OBJ
served, will greatly help to assure an
adequate supply of petroleum for the
military and naval needs of the
United States in view of the obliga-
tons which this country must as
sumo for the maintenance of COL
lectlve security in the postwar world.
Contract Not Yet Signed.
Although the actual contract is
vet to be negotiated, the project
Is covered by an agreement in
principle" between this Government
and the Arabian American Oil Co..
owned by the Standard Oil Co. of
California and the Texas Co., and
the Gulf Exploration Co., owned by
the Gulf Oil Corp. Mr.. Ickes said
pthe agreement is conditioned on
obtaining approval of the rulers of
Saudi Arabia and Kuwait, in which
countries the oil fields are located.
tKuwait, sultanate lying
south of Iraq on the Persian
Gulf, is British protectorate
and has population of 50,000.)
Mr.. Ickes said terms of the agree
ment will return to the Govern
ment the entire construction cost
of the pipe line, plus interest, within
period of 25 years, together with
whatever net profit may be agreed
to in the final contract. Oil in the
reserve will be made available for
military Use at a cost 25 per cent
below the market price in the Per-
sian Gulf region, or of similar oil
in the United States, whichever
price is lower.
Under the agreement, the Pc
Ltroleum Reserves Corp. will con-
'struct, own and maintain the pipe
line. The Government will decide
on a plan of operation and will
maintain supervision.
Will Save U. S. Stocks.
Completion of the agreement
should allay criticism that the
United Nations in this war have
been draining off too large pro-
portion of limited oil reserves in
this country as Mr.. Ickes said the
move 'is designed to offset, in
measure. the dwindling oil reserves
in the United States" He pointed
out that our known reserves are
estimated to be adequate for this
Nations needs for only relatively
few years"
The Saudi Arabia and Kuwait oil
reserves are estimated at 5,000,000,-
900 barrels, something more than 25
per cent of known reserves in this
country. The estimated 1000 100000
barrel American reserve resulting
from the agreement was described
by Mr.. Ickes as sufficient to care for
the needs of our armed forces for
several years. even at the present
unprecedented rate of consumption.
The Government is not obligated to
take any part of the reserve, but it
has the right to do so over period
of so years.
The agreement eliminated weeks
of negotiation and involved the
White House, State Department and
other Government agencies. Mr..
Ickes conferred several times last
week with President Roosevelt and
on one occasion was accompanied
by Secretary Hull.
Terms of the new agreement, 1t
was pointed out, contrast sharply
(See PIPE LINE, Page A-5)