Coll 30/124A 'Koweit (Neutral Zone) Oil Concession: Negotiations with Petroleum Concessions Ltd.' [‎27r] (53/883)

55Q/4Q Commonwealth Relations Office,
Downing Street,
SECRET Whitehall,
London, S.W.1 •
^ 1948 .
At a recent inter-depa.rtmental meeting v/ith the fJinisti’j’’ of Fuel
and Power and the Foreign Office the position regarding bids for the
petroleum rights in the K owe it Neutral '"’one was reviewed and the
question whether it would be desirable to try to influence the Sheikh
in favour of a particular oil company or group of companies was
specially considered#
was generally felt that the increase in the bidding was such
that the large sums involved might soon be incommensurate with the
oil prospects of the area# There may however be companies having as
yet no concessions in the Middle East which may still wish to raise
the stakes; and clearly H#r#G# is not in a position to influence the
/merican companies in deciding hoi/ much they arc prepared to offer#
7:0 should be interested to know whether you consider it likely that the
Sheikh may close the bidding at an early date or prolong the auction
for an undefined period.
3« The latest definite bid of which we have information is that of the
Amerada Petroleum Corporation, 'which offered an initial payment of
$ million, a minimum annual payment of $ $00,000 and a royalty of 25
cents per barrel# w G have recently heard that if Amerada succeed in
gaining the concession, it will be joined by the Continental Oil Company
and ^ the Seaboard Oil Company, both of which have been successful in
their operations in U.S.A. Vo are adviaod that Amerada, in conjunction
with the other two companies, would make a strong team and have
sufficient assets, knowledge and ability to make a success of developing
the concession.
7/0 do not ka <>w whether Gulf Oil Corporation intend to advance its
latest offer. However, as you are aware, it has boon mutually agreed
between the Anglo-Iranian Oil Company and the Corporation that if
either of them should obtain Kowoit's rights in the Neutral Zone it
would share them equally with the other. For the present the A.I.Q.C.
are debarred from bidding even as an equal partner with the Gulf Oil
Corporation in the Loweit Oil Company# This position may alter when
the Red Line Agreement is revised, negotiations regarding which are still
proceeding, though it appears unlikely tliat ahy. settlement will be
reached for three or four months at the earliest.
3* Ly the time j^ou receive this letter 3 r ou will no doubt have seen
Abraham, who will have explained to you the Burmah Oil Company’s
intention to increase its previous bid and its readiness to go up to
£1,000,000# Before leaving here Abraham renairked that, if unsuccessful,
he would, after his return to the U.K., probably approach Gulf with the
object of endeavouring to arrange a tripartite agreement between Gulf,
A.I.O.C., and B.0#C.,.with the purpose of acquiring jointly the Koweit
share of the rights in the Neutral Zone# Vo have no indication whether
A.I.O.C. and Gulf v/ould look favourably on this grouping of companies,
which as far as we are concerned would seem quite a good arrangement.
Lt. Col. Sir R. Hay, K.C.I.E., C.S.I.,
Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. 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. ,
Bahrein.
Vo/