Concessions in Bahrein [Bahrain], Kuwait, &c: correspondence, 1932-Jul 1933 (Colonial Office Secret Print, Middle East No.49) [‎72v] (146/284)

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(j) Clause 14. This contains no provision that on the abandonment of any excavation pit or
any well by the company, such excavation pit or well shall be properly fenced or enclosed.
(k) Clause 15. For the grant of such an enormous concession what amounts to a salaami of
Rs. 30,000 appears to be a completely inadequate sum, and unless the maximum area to
be leased is greatly reduced, I suggest that this figure should be enhanced to one lakh One lakh is equal to one hundred thousand rupees .
In addition, a sum of Rs. 20,000 prescribed as an annual payment thereafter seems also
completely inadequate. As thfe sum is subsequently to give way to royalty, it is evident
that it represents a minimum royalty, that is, a minimum dead rent, which at the rates
prescribed in our Indian rules would be, for 640 square miles, Rs. 30,49,600 as we have
seen above. If the final area to be retained were, however, limited to 100 square miles, the
minimum dead rent would be reduced to Rs. 1,93,600, and if the concession were split up
into separate blocks and each assessed for dead rent and royalty separately, then the total
minimum dead rent would be much smaller. Thus, on 6 blocks of 20 square miles each,
the minimum dead rent would be Rs. 19,200 x 5 =Rs. 96,000. It seems impossible, there
fore, to recommend that this figure of Rs. 20,000 should be enhanced to less than 1 lakh One lakh is equal to one hundred thousand rupees
even with a leased area restricted to 100 square miles. If, however, it were decided even
tually to treat this concession in a different way from that prevailing in India and to
exact a permanent dead rent to continue irrespective of payment of royalty, then I should
suggest 2 annas an acre permanent dead rent over the whole concession, as suggested above
in paragraph 17 (c), and a minimum royalty of Rs. 50,000 in addition.
(I) Clause 16. It is evident from this clause that the Rs. 20,000 which, I suggest, be increased
to Rs. 50,000, is by way of being a minimum royalty.
(m) Clause 17. If the minimum royalty be left at Rs. 20,000, until the company declares that
it has found oil in commercially exploitable quantities, which may be assumed to be in the
opinion of the company the quantity of oil that should produce Rs. 70,000 as royalty at the
rate prescribed, then as Rs. 20,000 corresponds to 5,714 tons and Rs. 70,000 corresponds
to 20,000 tons, any quantity between these two figures in excess of 5,714 tons would escape
paying royalty at all, until the company had declared its success in finding oil in com
mercially exploitable quantities. I may mention that the rate of royalty of Rs. 3/8/-
per ton agrees with the royalty charged in India of annas 8 per barrel on the basis of
7 x 40 = 280 gallons to the ton. All that is necessary is to amalgamate Clauses- 16 and 17
to the effect that the royalty is to be at Rs. 3/8/- per ton subject to a minimum royalty
of Rs. 50,000.
(n) Clause 19 (&) contains no provision for the deposit of plans and information with the
Shaikh on abandonment of the work. Also this clause would require radical modification
if the lease be remodelled to conform to the Indian lease of 30 years with right of enhance
ment of rate of royalty on renewal for a further 30 years.
(o) Clause 21 does not suggest how the Shaikh's arbitrator is to be selected. I suggest that it
should provide that the Shaikh in such a case should receive expert advice and that his
arbitrator should be approved of by the Political Agent A mid-ranking political representative (equivalent to a Consul) from the diplomatic corps of the Government of India or one of its subordinate provincial governments, in charge of a Political Agency. at Kuweit.
18. In addition to the points enumerated by me above as the result of perusing
the lease consecutively, there are others of which by far the most important is the right
of pre-emption in time of war concerning which I strongly urge that a clause be
inserted.
19. In addition, a comparison of this projected agreement with our standard form
of mining lease shows the following omissions :—
There is no clause analogous to Part III, Clause 4, of the standard form of mining
lease : perhaps this can be omitted.
Part IV, Clause 2. Liberty to make railways and roads is not reserved.
Part VII, Clause 2. There is no reference to the demarcation of boundaries.
Part VII, Clause 6. There is no provision for inspection on behalf of the Shaikh.
Part VII, Clause 5. No provision exists for reporting accidents : there will be no
expert body to whom such reports could be made; nevertheless good government
requires that the Shaikh should know what happens in his territory.
Part VII, Clause 8. There is no provision to report to the Shaikh the discovery of
other minerals.
Part VII, Clause 13. No provision for payment of compensation for injuries to
third parties.
Part VII, Clause 14. No provision that the company shall not obstruct the working
of other minerals; this might prove a serious omission if other prospectors discovered
other minerals in the area leased for oil.
Pait VII, Clause 18, which is the British control clause of Indian leases, is, of course,
missing, as also Clause 20 of Part \ II, granting right of pre-emption in time of war, and
Clause -) of Pait IX, granting power to take possession in event of war or emergencies.
20. Apart from the numerous specific defects in the draft agreement between the
Eastern and General Syndicate, Limited, and the Shaikh of Kuweit, my chief objection
to this agreement is that it appears to be in a form that will not work. There is no
provision for an adequate prospecting period and this appears to be the real reason
why it is necessary to provide for the selection of so large an area as 640 square miles.
If this agreement were to be remodelled on the lines of the Muscat and Bahrein agree
ments so as to provide for an exploration period of 2 years with a possibility of extension,
and a prospecting period of 2 years also with the possibility of extension for the reasons