Coll 6/48 'Oil: Concessions in Saudi Arabia. (Hasa)' [‎471v] (944/1153)

Syndicate an option over any rights which the syndicate might possess in Hasa,
the neutral zone and Koweit. It could only operate concessions in Hasa and
probably also in the neutral zone with the permission of the I.P.C.
(6) Standard Oil Company of California. —After the break-up of the
Standard Oil Group in 1912, many members of the group became independent,
including the above company. This company is one of the largest oil companies
in the United States, and is a complete unit, being engaged in producing, refining,
transporting and marketing crude oil and refined products. The company is
engaged in production in eight States in the United States, and has oil properties
in Colombia, Mexico and Venezuela. The Standard Oil Company of California and
the Gulf are independent of each other, although there is a general impression
that the various Standard Oil Companies still have some community of interest
and are prepared to co-operate in matters of general policy. At times, however,
there has been keen competition between them. As pointed out above, the
Standard Oil Company of California holds the Bahrein Concession, which it
operates through the Bahrein Petroleum Company, a Canadian Corporation. It
has also just secured from Ibn Saud an oil concession in Hasa, full particulars
of which are not yet available.
(C)— Past Concessions affecting Saudi A rabia.
(1) Northern Hejaz. —It is possible that certain concessionary rights were
granted in Turkish times, but this subject has not been explored in the Legation.
There was talk of a concession under the Hashimite regime and Mr. Philby was
one of those interested, but there is no evidence of a Hashimite concession having
been granted. Any interest of Mr. Philby’s is presumably identical with that of
Midian (Limited), an inactive but still going concern, closely allied with
Sharqieh (Limited).
(2) Jedda (Hejaz, West Coast of Arabia).—Two American engineers
(Twitched and Crane) carried out investigations for oil in 1931. The Petroleum
Department brought the matter to the notice of the Anglo-Persian Oil Company,
who replied that the geological prospects in this area were not regarded as
favourable (see under paragraph (A) (1)).
(3) Muscat. —The Anglo-Persian Oil Company obtained a concession in 1925
to prospect for oil for a period of two years with the right to a mining lease, but
this concession has now lapsed.
(4) Mokalla. —The Anglo-Saxon Petroleum Company started negotiations
for a concession in 1928-29, but the matter was not proceeded with as they
reached the conclusion that the prospects of discovering petroleum were quite
unfavourable.
(5) Hasa. —The Anglo-Persian Oil Company applied, probably for
prospecting rights only, to Ibn Saud in 1921. The E.G.S. came into the field
later. At the beginning of 1923 Major Holmes submitted a draft concession
to Sir P. Cox. In March 1923, the latter, acting under instructions from home,
suggested to Ibn Saud that he should decide nothing until he had had an
opportunity of considering an offer by A.P.O.C., whom His Majesty’s
Government considered to have a prior claim. About the same period or earlier
the two companies were in touch with each other with a view to sharing interests,
and it is stated that at one point they went through a pretence of breaking off
negotiations so that Ibn Saud might give the concession to E.G.S. in ignorance
of the interest of A.P.O.C., to whom he was hostile. Be that as it may, E.G.S.
got the concession, and on the 6th May, 1923, Ibn Saud granted an oil concession
(including the Qatif and Jubail areas) to the Eastern and General Syndicate.
Major Holmes gave an undertaking not to sell any part of the concession to the
A.P.O.C., and His Majesty’s Government thought of trying to induce Ibn Saud
to cancel this restriction, but the proposal was abandoned in May 1924. Thus
the A.P.O.C. were left out in the cold.
The final terms of the concession to E.G.S. are not known, but there are
indications that it followed the draft which had been submitted to Sir P. Cox
That draft, and probably the actual concession, included inter alia, provision
for the following :—
(a) Lapse of the concession if E.G.S. should fail to start operations in a
specified manner within nine months.
{b) Government right to cancel the concession after any continuous cessation
of operations for more than twenty months.