File 10/5 II Hasa oil: CASOC's activities in Hasa; development of Ras Tannura; Political Agent's visit to Hasa [‎106] (223/656)

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A rticle 11.
Upon the discovery of oil in commercial quantities, the Company shall
advance to the Government the sum of £50,000 gold, or its equivalent, and one
year later the further sum of £50,000 gold, or its equivalent. The due date of
the first advance shall be the date of discovery of oil m commercial quantities, as
provided m article 10 hereof, and the due date of the second advance shall be one
year later. In each case the Company shall have sixty days following the due
date within which to make the advance. Both of these advances are in account
of royalties, which may be due to the Government, and, consequently, the Company
shall have the right to recover the amount of these advances by way of deductions
from one-half of the royalties due the Government.
A rticle 12.
Since it has been agreed that the annual rental of £5,000 gold, or its
equivalent, is payable to the date of the discovery of oil in commercial quantities,
and since it has been agreed also that the annual rental is to be payable in
advance, it may happen that the last annual rental paid prior to the date of
discovery of oil in commercial quantities will cover a period beyond the date
of such discovery. In case that this period should be equal to or greater than one-
fifth of a year, the proportionate amount of the £5,000 gold, or its equivalent
corresponding to such period, shall be treated as an advance on account of
royalties due the Government, and consequently it should be recoverable by the
Company by way of deductions from one-half of the royalties due the Government.
A rticle 13.
As soon as practicable {i .e., allowing a reasonable time for ordering and
shipping further materials and equipment to Saudi Arabia and commencing
further work), after the date of discovery of oil in commercial quantities, the
Company shall continue operations connected with drilling by using at least two
strings of tools. These operations shall continue diligently until the proven area
has been drilled up in accordance with first-class oil-field practice, or until the
contract is terminated.
A rticle 14.
The Company shall pay the Government a royalty on all net crude oil
produced and saved and run from field storage, after first deducting—
(1) Water and foreign substance; and _ ^
(2) Oil required for the customary operations of the Company's installation
within Saudi Arabia; and
(3) The oil required for the manufacturing the amounts of gasoline and
kerosene to be provided free each year to the Government in
accordance with article 19 hereof.
The rate of royalty per ton of such net crude oil shall be 4s. gold, or its
equivalent.
A rticle 15.
If the Company should produce, save and sell any natural gas, it will pay ^
the Government a royalty equal to one-eighth of the proceeds of the sale of sucli
natural gas, it being' understood, however, that the Company shall be under no
obligation to produce, save, sell, or otherwise dispose of any natural gas. It 18
also understood that the Company is under no obligation to pay any royalty on
such natural gas as it may use for the customary operation of its installation
within Saudi Arabia.
A rticle 16.
The Government, through duly authorised representatives, may, during the
usual hours of operations, inspect and examine the operations of the C 0111 ! 3 ^ v
under this contract and may verify the amount of production. The Oomp ^
shall measure, in accordance with first-class oil-field practice, the amount o
produced and saved and run from field storage, and shall keep true and cor