Coll 35/42 'Persian Gulf: cable arrangements' [‎9v] (18/859)

■
n
(independent Oil lias been forced for the purposes 01 developing oil
resomrces in the lEiddle East).
These Companies have conbined assets of over 750*000,000 uollars.
Their annual volume of business exceeds 500,000,000 dol].ars and their
earnings per year approximate 75 > 000,000 dollars.
These corn allies are combined in support of American Inaep enden u Oil
Company as joint undertaking not only as to financiers but as go operators
and resources as well.
Their high cor.^petence and business success is well estaolished in tne
United States.
President of the Company is E.K. Davies, well known as operating nead
of the Petroleum Administration, United States Federal Government throughout
the war with extensive experience in large scale oil operations, domestic and
foreign.
I have known of the competition for this concession since early 1946.
when I met the Chairman of the Iraq Petroleum Company at Kuwait at thao time.
In the case of the American Conpany, the initial offer to the SheiKn o±
- Kuwait was 4,250,000 dollars purely for a concession to explore the area.
This was subsecjuently increased to a sum of 8,000,000 dollars guaranteed
cash payment which the Sheikh of Kuwait accepted.
Concession was signed on the 28th June 19^-
Although the terms of the Concession have not been published, I am
given to "understand on very good authority that these are as follows: —
1. An initial payment to the Sheikh of Kuwait oi b,000,000
dollars in cash.
2. An annual payment of 625 >000 dollars each year until oil
is discovered and produced.
3. When oil is produced the Sheikh is to receive a royalty
of 2 dollars 57 cents per ton.
I have been informed that clause 3 breaks the "Gentlemen’s Agreement"
entered into by all other Oil Companies in the Kiddle East whereby they
agreed that the maximum royalty they would pay would be 1 dollar 25 cents
per