Coll 30/216 'Development of oil supplies in the Middle East.' [‎23r] (45/131)

9
70. To the south of Kuwait is a neutral zone covering 1,800 square miles
over which both Ibn Sa’ud and the Shaikh of Kuwait enjoy equal rights in virtue
of the treaty of Mohammerah of 1922. As oil has been found in large quantities
immediately to the north, in Kuwait, and to the south in even larger quantities,
in the province of al-Hasa in Sa udi Arabia, it seems very probable that it may
also be struck in the neutral zone. *
71. As stated in the section of this report dealing with Sa’udi Arabia, the
supplemental agreement of the 29th May, 1939, between the Arabian American
Oil Company and the Sa’udi Arabian Government gave the former all the latter’s
rights, titles and interest in the Kuwait neutral zone. It is known that, besides
the Arabian American Oil Company, Petroleum Concessions, Ltd., an associated
company of the Iraq Petroleum Company, and the Eastern Gulf Oil Company
are desirous of obtaining a concession in this zone. The Shaikh of Kuwait, how
ever, has refused to discuss with anyone the question of his rights in that region.
In this connection, it is to be borne in mind that Kuwait is a British-protected
state which has special treaty relations with the British Government in virtue of
which the ruler undertakes not to cede, sell, lease or give for occupation any
portion of his territory to the Government or subjects of any other Power without
the previous consent of His Majesty’s Government.
72. An obstacle to the working of a concession for the neutral zone would be
the difficulty of administration occasioned by the fact that, whereas there are no
capitulations in Sa’udi Arabia, they, together with reservations in regard to
mixed courts, still exist in Kuwait.
XIV.— Bahrain.
73. The Bahrain Petroleum Company, Ltd., though nominally a British
concern (it was incorporated in Canada in 1929), is owned jointly by two United
States companies, the Standard Oil Co. of California and the Texas Corporation.
74. The company purchased from the Eastern and General Syndicate in
1930 a concession which the latter had acquired in 1925 covering 100,000 acres.
This concession is valid until the 29th December, 1989. By agreements between
the Shaikh of Bahrain and the company, the area covered by this concession was
extended,in 1934 and again in 1940, and it now covers all the Shaikh’s territory,
together with the reefs and territorial waters surrounding the islands. Conflict
ing claims to certain of the outlying islands by the Shaikh of Bahrain and the
Government of Sa’udi Arabia are likely to delay, if not prevent, attempts by the
company to examine and exploit these islands. It is perhaps worth noting that
the Persian Government protested to the United States Government in 1934 when
the company’s concession was first extended, on the grounds that Bahrain was
Persian territory (this claim, which has no valid basis, has often been made to,
and refuted by, the British Government).
75. Oil was first struck in 1934 on the structure at Jabal Dukhan, on Bahrain
Island. Since that time, the field has been greatly developed. Production in 1939
was 1,034,000 tons; it was reduced in subsequent years for reasons connected with
the war. There is reason to believe that the field has reached its peak, but further
producing wells may be discovered by drilling on the outlying islands and in the
territorial waters
76. In the year 1357 A.H. (March 1938-February 1939) the state revenue
amounted to Rs. 22,10,000; of this 65 per cent. (Rs. 14,50,000) consisted of
royalties from the Bahrain Petroleum Company.
77. The refinery, which is on the east coast of Bahrain Island 9 miles south
of Manama, has a capacity of 2,750,000 tons per annum; the excess refinery
capacity over local production is utilised for the treatment of crude oil from the
neighbouring oilfields in al-Hasa (Sa’udi Arabia). An aviation spirit plant is a
recent addition to the refinery.
XV.— Qatar.
78. Petroleum Development (Qatar), Ltd., an associated company of the
I.P.C. with the same shareholders, has a capital of £760,000. It holds a con
cession from the Shaikh of Qatar which is valid for 75 years from the
17th May, 1935. A sum of Rs. 4,00,000 was paid to the ruler on signature, and
annual rentals of Rs. 1,50,000 were fixed for the first 6 years and of Rs. 30.000
[63—76] r