TNAG-0947-FCO40-1166-Oil-developments-in-and-around-Hong-Kong-1980 — Page 38

CODE 18-77

SS 8/78

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Mr Torty ESSD

Mr Sega, MED

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UM/31/10

CONFIDENTIAL

Reference

[1KK162/1

4 NOV 1980

(Separate copies)

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HONG KONG: PURCHASE OF SAUDI ARABIAN OIL

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1. I attach Hong Kong telegram No 1438 in reply to our telegram No 977 which was sent off last night after consulting you.

2.

Hong Kong's replies to the various questions put to them seem fairly convincing to me, and they confirm that the situation is pressing because of their low stock position. They do not, however, say that it is desperate, but presumably it could become so if we say that they must not take up the offer made to them through a Saudi middle-man. I imagine that, in these circumstances, they might come to us for help in the form of North Sea oil. Would we be in a position to assist them, or can ESSD suggest any other sources that Hong Kong might try?

3.

Whilst this department is anxious to be as helpful as possible to Hong Kong, it is a matter for MED's judgement as to whether the action proposed by Hong Kong would prejudice our relations with Saudi Arabia should the deal come to light.

4. I should be grateful for advice so that we can give Hong Kong a quick and hopefully helpful answer.

5. Tomorrow is a normal working day for the Hong Kong Government and we should, therefore, send at least a holding reply by close of play today. Moreover, the Governor leaves Hong Kong tomorrow for London and will be seeing Sir E Youde on 3 November and the Secretary of State on 4 November. I expect that he will have been briefed on the subject and we may need to prepare our own brief for his visit if we are not able to say 'Yes' today.

31 October 1980

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CONFIDENTIAL