CONFIDENTIAL
Subsequently, a company (Owensbord Enterprises Ltd) has been set up with a board consisting of directors from the two power companies, the two oil companies involved (Shell and Esso) and the Government, the latter having the controlling interest. The company is intended to discharge the functions described at (b) in the second paragraph above. It will hold its first Board meeting on July 11th 1980 and will thus commence the process of examining this proposal in detail.
One aspect of which you will wish to be aware is that it is likely that a cargo of refined product of this magnitude will have to be obtained from Kharg Island in Iran which is one of the few places with sufficient facilities and oil of the right type. Hong Kong's Import and Export (General) (Amendment) Regulations 1980 do not prohibit imports from Iran so, prima facia, the proposal is not affected.
We understand, however, that at one stage, UK decided not to increase imports from Iran so are concerned that our proposal could possibly be regarded as politically inept if it turned out to involve Kharg Island. The import of about 200,000 tons of fuel oil from Iran to carry out this scheme would represent 93% of our imports of fuel oil from Iran in 1978 of 215,000 tons, which was also our total oil imports from Iran. For the first three months of 1980, the total amount of fuel oil imported from Iran was 46060 tons.
I will keep you in touch with progress on this matter and in the meantime would be grateful for any comments you may have.
RMC/il
Yours,
Pachel
(R.M. Cartland) (Mrs)
for Secretary for Economic Services
CONFIDENTIAL