File 2249/1915 Pt 1 ‘Oil: Mesopotamia & Persia: General File’ [‎32v] (69/478)

II.
5. Colonel Wilson raised the question of the oilfields at JNatt Khana, situated on
the Perso-Iraq frontier in the neighbourhood of Khaniqin. I he dijdomatic situation
as affecting this area may be briefly stated. 1 he L urco-Persian frontier was delimited
in 1914 by a mixed Commission including representatives of Croat Britain, Russia,*
Persia, and Turkey. The Commission completed its proceedings just before the entry
of Turkey into the war, but its conclusions have never been ratified by the Govern
ments concerned. Prior to the actual delimitation, the Turks agreed (Annex B to
Protocol signed at Constantinople 17th November 1913) that the rights acquired by
the Anglo-Persiaii Oil Company under their concession from the Persian Government
should be maintained in full force in any areas, previously Persian, that might be
assigned to Turkey by the Boundary Commissioners. By the same Protocol the
Persian Government agreed to forego all rights to royalties, &c., in respect of the
“transferred territories.” As regards the particular area now in question, a
“ Declaration ” signed by the British and Russian Commissioner in May 1914
recognised the fact of its occupation by a Persian tribe (the Sinjabis), thus bringing
it within the scope of the above provisions.
6. Colonel Wilson explained that boring operations had been started at Naft
Khana in 1918, the Anglo-Persian Oil Company undertaking the work on behalf of
the military authorities. The Company take so confident a view of the potentialities
of the field, that they have dismantled a refinery in New Zealand and have had the
plant shipped to Basra for the purpose of dealing with the Naft Khana output. The
field is indeed likely to prove as rich as those already worked by the Company in
Persian territory. Colonel Wilson took the view that the rights of the Anglo-Persian
Oil Company at Naft Khana should be maintained ; but he considered it desirable
that the field should be worked, not by the Anglo-Persian Oil Company direct, but by
a separate Company—an offshoot of the parent Company—formed for the purpose,
with its head office at Baghdad. He could arrange to furnish the Company with land
for a refinery and pipe line. The Mesopotamian Administration would expect to
derive some revenue from the field.
7. Since the meeting, Colonel Wilson has put in the following short note on the
subject : —
“I venture to urge that the Petroleum Executive be moved, when informing the
Anglo-Persian Oil Company that their rights in Naft Khana area have been
confirmed, to stipulate that if and when a new Company is formed to work
this area, the Treasury should have 55 per cent, of the shares, as in the
case of the Anglo-Persian Oil Company. It is essential that a new Company
should be formed, as provided in the protocol. It is also, in my judgment,
essential that the Treasury should have participation and control to at least
the same extent as in the case of the Anglo-Persian Oil Company.
f The rights of the Iraq State as the successors of the Turkish Gover
already safeguarded by the protocol.”
8. The Conference accepted Colonel Wilson’s view that the rights of the
Anglo-Persian Oil Company at Naft Khana should be maintained ; and they concurred
generally in his recommendations for the working of the field.
m.
9. In conclusion, Colonel Wilson referred to the negotiations at present in
progress at Paris for the disposal of future oil interests in Mesopotamia. He
explained that oil is the only immediately available asset of the occupied territories,
and the only real security that the Iraq administration are in a position to offer for
the loan which they will undoubtedly require in the near future from the British
Treasury. He felt grave misgivings about an arrangement, the effect of which would
be to hand over to a comparatively small number of shareholders the whole interests
of the Iraq State and of the British Treasury in what might well prove to be the
richest odfields in the world, in exchange for nominal control over oilfields not in
British territory which might or might not be effective in'practice. He pointed out
that such a policy would be the exact reverse of that adopted by His Majesty’s
Government m regard to the Persian oilfields. It would be opposed to the present
tiend of opinion m favour of nationalising certain essential industries such as electric
power, transportation services and coal, and would be very difficult to defend in
1 aid lament or elsewhere. It would, moreover, be likely to arouse American opposition.
dodoO OGof 800 d th6 CapitallSed vall,c of the Mesopotamian oilfields at about
India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. ,
10th April 1919.
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