File 10/5 II Hasa oil: CASOC's activities in Hasa; development of Ras Tannura; Political Agent's visit to Hasa [‎173] (350/656)

r.^glcmme in office ■
covering letter
THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT
August 10, 1939.
S ection 2.
Copy No.
Mr. Trott to Viscount Halifax.—{Received August 10.)
(No. 123.) ' '
My Lord, Jedda, July 23, 1939.
I HAVE the honour to transmit to you herewith a copy of the agreement
which was signed at Riyadh on the 31st May last by representatives of the Saudi
Arabian Government and of the California Arabian Standard Oil Company.
The procedure of ratification by both parties will be understood from the terms
of articles 15 and 16 of the agreement: the ratification of the Saudi Arabian
Government was published in the Mecca paper Umm-al-Qura on the 7th July,
1939; the agreement itself was not published in the local press until the 21st July,
which, under article 15, becomes the '' effective date '' on which the agreement
enters into force. It is evident that the San Francisco office of the company
must have forwarded its ratification, though no formal notice to that effect has
yet appeared.
2. The text of the agreement will no doubt be studied by the competent
departments of His Majesty's Government, and I propose to confine myself in this
despatch to a few comments on some points, which, on a first reading, appear to me
worthy of notice. .
3. The references in this agreement to the previous bne signed in 1933 accord
perfectly with the text of the latter instrument, which was printed as an enclosure
to Foreign Office Print (Confidential) No. 15474 of the 22nd September, 1938.(^
There is, however, no mention of any document dated the 27th May, 1933; the new
agreement refers to the original 1933 agreement as " the Saudi Arab Concession,"
and says that it was signed on the 29th May, 1933, the same day as that on which
Mr. L. N. Hamilton addressed to the Saudi Minister of Finance his letter con
taining four paragraphs and now called the " Second Principal Agreement."
4. The areas to which the new agreement, or rather the three agreements
taken together, applies are set forth in the terminal schedule. Not only is the
previous concessionary area in Eastern Arabia included, but a northern area, a
southern area, and the two neutral zones are now allotted to the company for
exploitation. I learn from Sheikh Yusuf Yasin that His Majesty turned over in
his mind for a long time the question of the boundaries of the northern and
southern areas : he is unwilling to have any oil prospecting in the centre of the
country, and he knows that there is considerable doubt as to where its frontiers
really are. The new areas cannot be traced on a map unless the^position of such
points as " the northern end of the westerly edge of the Dahana, the southern
end of the westerly edge of the Dahana," " the north-east corner of the boundary
line between Yemen and Saudi Arabia," and of the northern edge of the Great
Nefud are first determined. I have not yet been able to fix these places with any
accuracy on any map.
5. No mention is made in the new agreement of the contact line between
the sedimentary and the igneous formations which probably does not coincide
with the eastern edge of the Red Sea Concession. But it is clear from article 12
that whatever preference rights the company possessed under the previous agree
ments over areas not yet assigned to them still persist.
6. The company has the right, under section (c) of article 6, to promote a
company or companies of a nationality acceptable to the Government to exploit
the oil in either of the neutral zones; it also possesses vaiious lights of transport
in and access to those zones. . . , , • t •
7 Article 9 gives the company certain rights over the area assigned in 1936
to Petroleum Concessions (Limited) in the Red Sea area.
( l ) See " Further Correspondence respecting Eastern Affairs, Part XLIII, No. .""""V
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