Coll 30/124A 'Koweit (Neutral Zone) Oil Concession: Negotiations with Petroleum Concessions Ltd.' [‎10r] (19/883)

SECRET.
-D. Q • JNo • 591, *** 3
ihe Residency An office of the East India Company and, later, of the British Raj, established in the provinces and regions considered part of, or under the influence of, British India. ,
Bahrain,
the 19th March 194
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Please refer to your demi-official letter _.
Ext. 550/48 o f the 3rd March about the auction for the
concession in the huwait share of the huwait neutral i
oil
£one.
2m in paragraph 2 you ask me ho* long the auction is
likely to last. i have replied to this question in my
telegr am flo.219 of the 15th March despatched from Kuwait.
The Shaikh hopes to close the auction in May and has asked
all the competitors whom he recognises to send representatives
to Kuwait then. it appears that he wishes, if possible,
to exclude the other competitors vizi Amerada* the Sinclair
interests ITwitchell) and the Superior Oil Company, from whom
he has refused to accept offers pending the production of
references.
3. i am told tnat the Shaikh will in due course ask
the Company which makes the highest bid to produce its detail
ed proposals. if they do not satisfy him he will turn to
the next highest bidder.
4. Prom the local point of view the combination of
companies suggested m your paragraph 5 would be ee-Hv-emantl.y
satisfactory and i, feel sure it would be acceptable to the
Shaikh who would welcome the prospect of a solution whicn ^
would leave as few as possible of his friends disappointed.
5. i Was sorry to learn from paragraph 6 of your
letter that the economic crisis may make it necessary for the
ijuimah Oil Company to withdraw from the auction. i am not
in a position to argue on this subject but i would point out
that it is likely to be some years before operations can
start on an extensive scale in the neutral hone. negotiat
ions between the successful company and the shaikh, and then
between «,ne ahaikh , 3 Company and Ibn Saudis Company, and then
between the two Companies, H.m.G. , ibn Saud and the Shaikh
regarding political and administrative arrangements will
inevitably take a long time and after that a considerable
period must ue devoted to exploration and surveying before
operations can start for the production of oil, if it is
discovered. bo far therefore as the shortage of steel is
concerned it would appear probable that the Kuwait Oil
Company and also Petroleum Concessions .Limited in Qatar will
have completed most of their constructional programme before
steel is required for operations in the JNeutral Zone. in
these circunstances 1 very much hope that it may still oe
found possible to allow a British Company to compete for the
Neutral Zone Concession, if not on its own, then jointly
with an American Company as contanplated in paragraph 5 of
your letter.
6. The report contained in my telegram ho.228 of the
12th March that it was understood that the Shaikh intended
to ask for payment to be made in dollars may perhaps influence
the Treasury’s attitude in this matter. The information was
obtained not from the Shaikh himself but from his Secretary
Abdullah Mullah who told Schooling the Manager of the Ottoman
/ Lank
J.P.Gibson Esquire,
Commonwealth Relations Office,
Downing Street,
London, s.W.l.