Coll 30/124A 'Koweit (Neutral Zone) Oil Concession: Negotiations with Petroleum Concessions Ltd.' [‎27v] (54/883)

e feel thf.t re cannot dictate to the oil companies whether or with
whom tr;ey will go into partnership, although the British companies
rill undoubtedly consult us before finally committing themselves to
any such agreement. As regards the Burmah Oil Company I should
explain that it is an important shareholder in A.I.O.C. and consequently
if it were to acquire rights in the Neutral Zone it would tend to
develop the area, in agreement with the Koweit Oil Co.
o. I should here say in parenthesis that since our interdepartmental
meeting, there has been an important development so far as the
participation of the Burmah Oil Company is concerned. The Treasury
have expressed the opinion that, in view of the deteriorating position
Ox our balance of payments since January, 1947* and the snail amount
01 ste^l available, which, when taken with our dollar shortage, will
mean that the British petroleum industry will be hard put to it to
develop concessions already held, the Burmah Oil Company should be
hauled off as soon as possible from further participation in the
Neutral Zone ruction. Since, however, Abraham has already gone out
and since the Sheikh is apparently in no hurry to dispose of his
rights and it is unlikely that any final commitment will be reached
in the near future, the Treasury have said that they are prepared to
writ until Abraham returns hone in order to assess the position.
Nothing has yet boon said to the Burmah Oil Company about this
development and we should therefore prefer that you make no
reference to it in any discussion with Abraham.
, . " e realise that there are likely to be some administrative
difficulties if the Sheikh grants a concession to a company not
connected in any way with the company already established in the
vicinity. If two separate companies in Koweit and the Neutral
Zone were expanding their operations simultaneously, they night
be faced with a shortage of labour, and the cost of local labour
and materials might rise rapidly. In their own interests, however,
two computing companies would probably make arrangements to ensure
that action by one of them did not seriously prejudice the position
ol both, though an independent company would naturally wish to push
ahead with its development in order to got quick returns on its
capital. I should be grateful for your opinion whether any real
difficulty of this nature would be likely to arise. No doubt the
local manager of the Koweit Oil Company, or Couthwell in the course
of cine of his visits, will have informed the Nheikh of his views as
to the disadvantages likelj' to be suffered b 5 r his company or Koweit
from the appearance on the scene of an entire^ new company.
• Tnere is a further aspect of the Koweit Neutral Zone question
which requires consideration. Based on the best information
available, the expansion programmes for the oil fields of the
different Middle East countries provide for the following increases
in production:-
Country
1946
125!
Millions
of Tons
Persia.
19.2
37.0
Iraq
k»7
13 .5
Saudi Arabia
8.0
•25.5
Bahrein
1.1
' 1.2
Koweit
0.8
24 .Z{.
Oatar
nil
1.0
Total
H ..8
102.6