File 1421/1908 Pt 3 'Persia: oil; negotiations between the Shaikh of Mohammerah and the Anglo-Persian Oil Co.' [‎268r] (101/338)

[This Document is the Property of His Britannic Majesty’s Government.]
PERSIA.
CONFIDENTIAL.
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[44293]
vr.
I {J
[December 6.]
Section 3.
No. 1.
Anglo-1 ersian Oil Company to Foreign Office.—(Received December 6.)
Winchester House, Old Broad Street, London,
Dear Mr. Mallet, December 5, 1910.
IN the accompanying official letter I have confined myself to dealing with the
letter from you to which it is a reply, and to the misunderstanding on which that letter
is based. I do not see what else I could do, but as, from private sources, I learn that
the issue does not arise from the misunderstanding in question, or, at all events, if it
arose there originally it now goes much deeper, I write you this further letter in the
hope of saving time.
I am told that the British consul in Mohammerah has expressed the opinion that
the sheikh should get something more than compensation and rent or sale price of his
lands at market value, in accordance with article 3 of the concession—something more
in money I mean, apart from the indirect advantage that he will derive from the
development of an important industry in his territory.
If this information is incorrect, we shall be delighted to be corrected.
If, on the other hand, it is correct, we shall be personally very glad if the sheikh
gets a “ surcharge,” both because our greatest desire is to live in amity with him, and
because, while getting generous terms from us hitherto, he has so far honourably kept
his part of all bargains between us. I will go further, and say that, if it is your
desire, we are ready, if you give us the assistance of the British Legation and consuls
in Persia, and if the sheikh himself assists, to endeavour to secure a “ surcharge ” for
him. But we are not prepared ourselves to pay twice over for oil.
It is true that in the case of oil found in Bakhtiari territory we are in some
danger of paying twice over, but we do not mean to pay it there if we can help it,
and, in any case, that case must form no precedent. In the first place, the Bakhtiari
agreement was not made by this company, but by the original concessionnaire and those
then associated with him, and this company bought the concession with that, but with
no other similar, liability attached to it.
By the concession of May 1901 the Persian Government granted to the conces
sionnaire the privilege inter alia to search for, obtain, &c., and sell, &c., petroleum, &c.,
in a specified area, which includes inter alia the Bakhtiari and the sheikh’s territories,
in consideration of certain payments.
Such of the payments as were required to be made to the Persian Government
have been made. The remaining payment is in the form of a share of profits when
profits accrue.
The Persian Government also bound “ itself to take all necessary measures to secure
the safety and the carrying out of the object of this concession ” (article 14).
It is true that in the case of oil found in the Bahktiari country we are even now in
some danger of having to pay for oil twice over, but that was altogether an exceptional
case* in which the concessionnaire and those associated with him were the victims of
force majeure.
In the year 1905, before the concession had been bought by this company, the
exploring party employed by the concessionnaire and his associates to search for oil was
held up by the Bakhtiaris in their country vi et armis. They scofled at the concession
granted by the Persian Government, and ordered the exploring party to desist or pay
up. In a settled country the concessionnaire could have called upon the Government to
make good its grant. As matters stood, to do this would have meant at the best an
interminable delay, and, with a pistol at his head, the concessionnaire paid. Ibis
payment is embodied in the Bakhtiari agreement of which you know—an agreement
made under stress of circumstances. It leaves us with an equitable claim on the
Persian Government for whatever has been or will have to be paid to the Bakhtiaris in
excess of what was in any case due under paragraph 2, article 3 of the concession, viz.,
“ prices ordinarily current for lands in their respective localities without surcharge.
I have written “an equitable claim,” because inasmuch as stress of circumstances
prevented the concessionnaire’s calling on the Persian Government to make good
[1805/-3] , . , ,
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