NATIONALIZATION OF ESSO AND MOBIL FACILITIES IN ALGERIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70S00385R000100240004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 12, 2016
• Document Release Date: June 4, 2002
• Sequence Number: 4
• Publication Date: August 30, 1967
• Content Type: MEMO

OPTIONAL FORA
, VIYroved For
MAY 1 961 FD1
GSA FPMR (41 CFRI 101-11.6
eaib8/01 : CIA-RDP70S00385ROOd
UNITED STATES GOVERNMENT
Memorandum
TO : Director of Economic Research
1 FROM :
100240004-1
.reRor
DATE: 30 August 1967
SUBJECT: Nationalization of ESSO and MOBIL Facilities in Algeria
REF . UPI 032A and UPI 033A, dated 30 August 1967
1. Reference indicates that Algeria today nationalized five
American-run oil companies. On June 6, 1967, during the Arab-Israeli
war, the Algerian government placed all American firms under State
supervision but drew a distinction between temporary control and
nationalization. Today's action removed that line for the five oil
companies. These companies have been engaged primarily in distri-
bution, althoug:i, as indicated below, one has been engaged in ex-
ploration and two have interests in the Algiers oil refinery, which
has a capacity of 42,000 barrels per day.
Company Activity
ESSO Standard Algierie Transport
ESSO Africa Marketing and a:--
17.6% interest
in Algiers refinery
ESSO SG.harienne Exploration (In-
active since Arab-
Israeli war)
MOBIL Clil Nord Africaine Marketing
MOBIL Cil Francaise Transport and a 6%
interest in Algiers
refinery
The ESSO distribution system consisted of a terminal and service stations,
and the Mobil facilities involved probably are similar. Undoubtedly
the U.S. companies will contest nationalization and seek prompt compen-
sation as a matter of principle, but it is doubtful that they are greatly
concerned. Not much investment is involved and distribution activities
have not been very profitable because marketing margins in Algeria have
been too low.
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2. ESSO served about 22 percent of the Algerian market and
MOBIL about 8 percent. As the Algerian market consisted of about
9 million barreLs per year for domestic use and 1.11- million for
the bunker trade, the affected facilities probably were handling
about 3 million barrels per year. The value of the facilities can-
not be great. The capital of the Societe de la Raffinerie d'Alger,
which owns the :refinery, is only about $8 million. In January the
British Petroleum Company Ltd. (BP) sold its distribution network
which served 13 percent of the market, and a 10.4 percent interest
in the, Algiers refinery to SONATRACH, the Algerian government-owned
oil company for $1.2 million. The BP distribution network was valued
at $4.5 million but this amount was more than offset by debts owed to
Algeria, in large part to the Algerian customs. In the end BP owed
SONATRACH $120,000 on the distribution system portion of the deal.
On the basis of the value of BP interests and relative shares in the
market and the refinery, the ESSO and MOBIL distribution systems may
have a combined value of about $10 million and their combined
interest in the refinery may be about $3 million. If there are
offsetting obligations, as in the case of BP, the amounts involved in
the nationaliza-:ion would be somewhat less.
3. Acquisi6ion of the ESSO and MOBIL interests increases
SONATRACH's share of the market to about 43 percent and its share in
the Algiers ref::nery to 44 percent, allowing for its half interest in
the 10 percent owned by the French-Algerian Societe Nationale de
Rechereches et d'Exploitation en Algerie (SN Repal). Other owners
are Royal Dutch Shell (18 percent), Compagnie Francaise des Petroles
(Algerie) FP(A )J (20 percent), and Compagnie Francaise de
Raffinage CFR) (12 percent).
4. Thus far, there has been no move to nationalize U.S. companies
producing oil in Algeria, such as MOBIL Sahara. Five U.S. companies,
Sinclair, Phillips, Mobil, El Passo, and Tidewater, are producing oil
in Algeria, but their share in total production is small, only about
7 percent.
National Interest Percent of Total Production
The Netherlands
(Royal Dutch Shell)
U.S. Ccmpanies
French Companies
Algerian Interest
(SONATRACH plus shares
in French Companies)
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Most of the production in Algeria is by French controlled companies.
SONATRACH has a 50 percent interest in SN REPAL, which owns part of
the Hassi-Messaoud oil field, and a 15 percent interest in the
CFP(A),;:'. which owns the rest of Hassi Messaoud. Nearly 4+5 percent
of the oil produced in Algeria comes from Hassi Messaoud. In June
1967, production began on a small scale, about 2.5 percent of monthly
production, at a newly discovered field, Berkaoui/Ben Kahla, owned by
ASCOP, which is comprised of SONATRACH (50 percent), and the French
owned companies Societe Petroliere Francaise en Algerie SOPEFAL
(16.3 percent), and CFP(A) (33.7 percent).
5. Algeria, evidently intends to provide for its own oil require-
ments, as another decree issued on 30 August requires all foreign
oil producing firms, henceforth, to sell their oil outside Algeria.
There is further evidence that Algeria is interested in acquiring
greater control. over production. Some U.S. companies producing in
Algeria have been approached unofficially with a proposal that they
contribute their present concessions as investment in a new company
in which Algeria would be the major stockholder. Under this
arrangement the companies would continue to manage, and as joint
companies would no longer be subject to discrimination. They would
also pay taxes to the Algerian government based on the lower reference
price now reserved for French companies.
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2 q ftZ/01IC~ION
'CI.,AS~IF'
SUBJECT:AMERICAN-RUN
ALGERIA
luc 3"'
CIA OPERATIONS CENTER
SELECT FOR THE DCI
OIL COMPANIES NATIONALIIUD IN
Time Stam2
BI~LLETICj -- -~E
AE'jRICA,"3 RUfJ OIL COMPANIES, uTHE NATIONALIZED
ANHOU?ICEMFiJT.
ALESAID TODAY IN
.? 14 A 0
BUT THE GOVERUNTI3T DREW A CAREFUL DISTINCTION
TATETHAT TIME DETJEEN
TEMPORARY CONTROL AND NATIONALIZATION. TODAY'S ACTION ERASED THAT
LINE FOR THE FIVE OIL COMPANIES.
BOUJC E'DIE,:'9OE, A MILITANT IN THE ARAB CAMP, NEVER HAS RECOGNIZED
OFFICIALLY THAT THE JUNE WAR WITH ISRAEL IS OVER. HE URGED OTHER ARAB
LEADERS TO CARRY OUT A GUERRILLA TYPE WAR AGAINST ISRAEL BUT t1ODERATE
ARABS HAVE VOICED OPPOSITION TO SUCH A PLAN.
THE ALGERIAN AC's IO J CAME AS OTHER ARAB CHIEFS OF STATE U-,ERE HEETI NG
IN ICHARTOUsiQ THE SUDA09 TO PLAN A COURSE OF ACTION IN REGARD TO
ISRAEL. THE ARAB CHs WERE ALSO DISCUSSING POSSIBLE REPRISALS
A0AI ENT WEST ERN NATIONS THEY CALL ISRAEL'S '?FRIE:ns". '
OHE OF THE SUGGr 3TED REPRISALS AGAINST THE UNITED STATES AND
Eb ITAIN WAS A COHPL1ETZ BAN ON THE SALE OF OIL.
ec \ 4 A d-9i
1ST ADD OIL ALGIERS 032A XXX ANNOUNCEMENT.
THE ACJIIOUNCENE;'IT MANED THE FIVE COMPANIES AS E SO-STANDARD
ALGIERIED ESSO-AFRICA AND ESSO-SAHARIENNE, AS WELL AS
MOBIL OIL-CJORD AFUICAINE AND MOBIL OIL-FRANCE.
ALGERIA HAS DE;iJ AMONG MILITANT ARAB NATIONS DENANDING
P NISHNE`'T OF WESt ERD NATIONS ACCUSED OF ALLEGEDLY AIDING
ISRAEL' S JUNE VICTORY I N THE MIDDLE EAST WA
GH514AED R.
037A
OIL S?30 0X
JD ADD OIL ALGIEIPIS 052A X X X WAR.
ALGERIA BRONE R[;:LATIONS WITH WASHINGTON DURING THE SIX-DAY UARo
AT THE TINE, TNZ ALGERIAN GOVERNMENT OF PRESIDENT HOUARI BOUMEDIEPJm3E
PLACED ALL AUERICn?l FIRUS UNDER CONTROL OF THE
033A
OIL 8/30 f!
URGENT
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0 fA roved For ft'ease 2 2 GIA R1)P7" ^ 385R000100240004-1
 Approved For Release 2002/08/01 : CIA-RDP70SO0385R000100240004-1
Approved For Release 2002/08/01 : CIA-RDP70SO0385R000100240004-1