The U.S. government will soon start buying large amounts of crude oil on the world market for the first time, and is considering buying it directly from other governments - including Saudi Arabia's - rather than the major oil companies.
The oil companies are suspicious of direct government-to-government oil deals. For one thing, they would stand to lose some profits if shut out of the transactions. They also dislike anything suggesting even remotely that the government might somehow get into the oil business.
The government is preparing to buy crude for a proposed 1-billion-barrel strategic petroleum reserve as protection in the case of any future oil embargo.
President Carter currently has authority to buy 500 million barrels of oil for the reserve by 1980, and has proposed doubling this. Under Federal Energy Administration plans the government will start buying oil later this month, and will be buying up for the reserve by next year. The government buys large amounts of refined petroleum products from the oil companies - gasoline, for example - but has never bought crude on this scale.
The idea of buying oil directly from other governments has not been discussed in detail with any producing country, U.S. officials say. But Tom Noel, head of FEA's reserve program, says, "We will explore any possibility for a bilateral (government-to-government) agreement with any government which would result in lower acquisition costs."
Moreover, President Carter's principal energy adviser, James R. Schlesinger, is known to have raised the question of a possible direct oil purchase with Saudi Crown Prince Fahd in sensitive private talks during Fahd's recent visit here.
Saudi Oil Minister Sheikh Zaki Yamani indicated through a variety of channels before Fahd's visit that the Saudis wanted to discuss a supply arrangedment for the U.S. strategic reserve, according to one official.
Fahd himself said in an interview before his U.S. visit, "We are prepared to participate in building up the U.S. strategic oil reserve in order ot safeguard the future of industry and civilization in the U.S."
Schlesinger briefed Fahd and Saudi Foreign Minister Saud al-Faisal and other Saudi officials on the reserve program. The Saudis, according to one official, did not respond directly but invited Schlesinger to hold talks on energy questions, including the oil stockpile, later this year in Saudi Arabia.
The Saudis have the world's largest oil reserves, and now produce 10 million barrels of oil a day. They can increase production to 13 million barrels a day by 1978, and 16 million barrels a day by the 1980s.
One oil company executive with long experience in the Middle East said that if the Saudis eventually agree to participate in the strategic reserve program, "They wouldn't undersell Aramco," the Arabian American Oil Co., a consortium of Texco, Exxon, Mobil, and Standard Oil of California.
According to U.S. officials, a number of exporting countries have given some indication in the past of a willingness to discuss a bilateral sale, including Iran, Abu Dhabi and, to a lesser degree, Mexico and Venezuela.
One year before the Arab oil embargo, Yamani proposed that the United States negotiate a supply agreement with Saudi Arabia to allow a guaranteed share of Saudi oil to enter U.S. markets.
The French and the Japanese governments have been pursuing bilateral oil arrangements with the oil-rich Persian Gulf countries. France has limited crude oil supply arrangements with Saudi Arabia, Kuwait, Abu Dhabi, and Libya and , according to one French official, has been trying to expand or renew expiring agreements with the Saudis.
The Defense Department's Defense Fuel Supply Center, which is handling the reserve purchases, will buy the first shipment - 2 million barrels - in the next weeks on the spot market. On June 14 the department will open bids for 16 million barrels. FEA expects to have 250 million barrels in storage in salt domes by the end of 1978.
FEA Administrator John F. O'Leary recently estimated that the 500 million barrel reserve will cost between $7.6 billion and $8.8 billion.
Although oil on the world market sells for about $14.50 a barrel, the United States will pay the average acquisition cost of domestic oil - now about $11.50 per barrel due to price controls - and pass the roughly $3 a barrel difference on to U.S. consumers through FEA's regulatory program.
Passing the added costs on to consumers will save the federal government about $500 million. FEA officials say, and increase the cost to s consumers of petroleum products by about one-tenth of a cent a gallon.