NEGOTIATIONS BETWEEN INDONESIAN GOVERNMENT AND WESTERN OIL COMPANIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00429A001300020003-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 19, 2016
• Document Release Date: May 13, 2005
• Sequence Number: 3
• Publication Date: March 5, 1963
• Content Type: MEMO

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5 March 1963
MEMORANDUM: NEGOTIATIONS BETWEEN INDONESIAN GOVERNMENT
AND WESTERN OIL COMPANIES
1. In negotiations with the three major oil companies
in Indonesia--Caltex, Stanvac, and. Shell--Djakarta has re-
cently raised its demands to a point which, if held to,
would oblige the companies to cease operations. It is dif-
ficult to judge whether this is just another stumbling block
in the long, uneven history of the oil talks or whether
Djakarta has decided on a course that will lead to national-
ization of the companies.
2. Negotiations have been underway since late 1960.
An Indonesian government regulation of October of that year
in effect cancelled the concession agreements under which
the companies had. operated. and, required, that future opera-
tions be on a contract basis.
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4. A recent statement by Chaerul Saleh, the Indonesian
Minister of Basic Industry and Mining, may indicate that the
government wants to take over domestic marketing facilities
at an early date and that its new terms are aimed at squeezing
this function away from the companies.
5. Should, Indonesia force one or all of the companies
to leave, it would. probably try--at least at the outset--
to recruit assistance from both the West and. the bloc to
run the oil industry. It would. also depend. on Indonesians
trained by the three companies. It seems likely, however,
that the proportion of assistance ultimately would be weighted
toward the bloc.
6. A representative of Union Oil, an American firm now
seeking a contract in Indonesia, strongly implied to the Amer-
ican ambassador in mid-February that his was one of several
American firms being considered by Djakarta for new explora-
tion if negotiations with Stanvac should fail. He gave no
indication, however, that his company might be asked to take
over any of Stanvar.'c
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7. Indonesia has sent sixty students to the Soviet
Union for training in the oil industry and forty more re-
portedly will leave this spring. Their stay in the USSR
is expected to be five years. Other students are being
sent to Rumania, but no number has been reported.
8. The implementation of a 1961 Rumanian credit of
$35 million for the construction of a refinery and. for oil
development in Java has been delayed by Rumania's inability
to provide all the necessary equipment. Chaerul Saleh re-
cently announced, that the Soviet Union is ready to supply
the needed equipment.
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