Coll 30/124A 'Koweit (Neutral Zone) Oil Concession: Negotiations with Petroleum Concessions Ltd.' [‎164r] (327/883)

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FOU-lCiN OFFICE, ^..V.X«
9th . pill,1947*
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As you probably ki»ow the bheikh of Kowelt has recently
doclarob himself reaoy to dispose ox his oil rights In the
Neutral ^.one of Koweit* He has received bi( s flora the Iraq
x etroleura ( orapany, .f stern Gull C ompsiiy (Anerlcai) and the Jurush
v>ll Company ^i.rltiah). !e has not yet cloaod with any oi them
but we learn that the Iraq Petroleum t.omx^ny’s bid is
substantlrlly higher th^n tiiat s e by the uitaoh ull company#
. 1c rl 30 l *iii; na the.' stoti a g uo is maintained, the only
way of exploiting the zones oTl woula be for ceitooex (who hold
the concession from Ibn Gaud) and tfie Company who got the
concession from the oheikh of /loweit to make sonis sort of
working agreement for joint exploitation, bho queation azl aes
however, whether it would be preferable to try for a division
of the zone into two ports.
The Political resident A senior ranking political representative (equivalent to a Consul General) from the diplomatic corps of the Government of India or one of its subordinate provincial governments, in charge of a Political Residency. in the version Gulf was at first
opposed to our taxing the initiative in attempting; to bring
about a geographical division of the i eutral .one, sine >
nego iationa night well extend over yenrs and lead to a revival
of boundary disputes with uoudi iirobia elsewhere# He felt that
some kind of personal agreement between the two rulers regarding
the division of oil rights in the i outrol /ion© whether on a
geographical or some other basis would solve many of our
difficulties•
Hay has now had the opportunity of discussing the question
of oil rights In the xeutral x>ne with the uheikh. Vhe latter
said that if^Us^Oompony reached an agreement with Ibn baud’s
company for joint operations all would be wel-• Otherwise it
was for His Majesty’s Goveriiraent who had created the zone to
decide how it should be divided between the two companies. lie
said that he had no intention 6f raising the atter with Ibn Gaud
with whom he nev< r discussed local politics.
. bother Ills Majesty’s Ctareminent will actually be asked by
the viheikh of iloweit to take steps for the'division of t .*2 ^one
may depend on which oil company obtains theatreiku of Loaeit’a
rights^ If Gastem iulf do, they isiii no ^ubt corns to en
arraiige lent with Celtex (if they have not already done so), and
•the Shaikh will be content to 1 t the status of the Neutral
Co no reiiain as at present. If, however, to iUriTJUiCil onpany
obtain trie concession there is more chance of His Majesty’s
Government being pressed to arrange a division. In either cose
we ought to consider whether a division would be to His Majesty’s
Govern;/ont’s advantage or not.
resides the complications inherent in atte ipting a
geographical division of the zone to which Hay refers a further
difficulty would arise if an oil bearing structure were lator
discovered lying across the dividing line (though this is a
difficulty which coulu arise from any frontier line in oil
bearing territory;.
Gif'
draff toy— nith, .aq., . .,
JKDDA.
d.B.