File 2249/1915 Pt 4 ‘Oil: Mesopotamia & Persia. (General File) 1920–24’ [‎25r] (49/484)

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SECRET PRINT
THE 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. .
Baghdad,dated the 9th December 1921
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Telegram.
From—High Commissioner, Baghdad.
To—Secretary of State for the Colonies, London
No. 726.
Dated 25th November, 1921.
Your despatch dated 6th October, No. 316.
inon Fi A r T stl y Secretary of State’s for Foreign Affairs letter dated 9th August,
DLO, No. 3 of Miscellaneous correspondence No. 10 (see Appendix E) to
address of American Ambassador seems hardly consistent with instructions to
Civil Commissioner in 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. telegram of July 10, 1919 (see Appendix
A). No. nil which refers to the decision conveyed to the A.P.O.C. in a letter
from the Petroleum Executive dated 2-5-19 No. S. 312-J (see Appendix B).
This telegram and also Secretary of State for India telegram dated February
12th, 1920 (see Appendix C) authorising him to secure site for Diala refinery
was acted on by my predecessor. See also his Print No. 31615 dated 20-10-1919
(see Appendix D) copy sent to Secretary of State under oover of Civil Com
missioner’s endorsement dated 1-11-1919 No. 32877. An obligation to the
Anglo-Persian Oil Company was thereby incurred, the 'discharge of which
would seem to be rendered impossible by the restrictions it is now proposed to
lay down.
Secondly, may I suggest that in the matter of the Transferred Territories
Concession we are being frightened by a bogey of our own creation. The
American Consul here and I believe other American authorities elsewhere have
stated that America does not question the rights of the company to work the
Concessions relating to the Transferred Territory, the sole object of their attack
being the Concession of the Turkish Petroleum Company. I venture to urge
that it is well worth while approaching the American Government on the point
somewhat on the following lines:—Begins.
“ Lord Curzon’s note of August 1920 stated the position as it then was
bmee then drilling operations have continued at Naft Khanah, but just as these
are about to reach fruition the army for whose benefit they were originally
undertaken has been so greatly reduced that its demand for liquid fuel would not
compensate the capital expense incurred.
Simultaneously an ‘Iraq Government has been established which though
not yet able to stand alone, is rapidly consolidating and requires that the re-
Miurces of the country be developed. This Government accepts the Protocol of
913 and the connected Concessions as binding and proposes, while leaving the
question of the Turkish Petroleum Company for future consideration, to co
operate m the acceleration of work on the Naft Khanah fields. In view of
the notes which have been exchanged the Secretary of State for Foreign Affairs
desires to bring these facts to the notice of the U.S.A. Government and would
be glad to receive their assurance that the protests they have addressed as re
gards Mesopotamian oil fields m general were not intended to have reference
to these oil fields m particular. Ends.
Thirdly, oil has been struck at Naft Khanah and though not yet in paying
quantity prospects are bright. If this oil could be worked to the benefit of thf
raq State the effect would be excellent, politically and economically. The
negotiations with the A.P.O.C. would probably provide for foundation of two
Companies one to produce and one to pipe to refine and to sell the oil In
each of these the Iraq Government and the ‘Iraq Public, might be invited to
participate by providing the capital and from each company the ‘Iraq Govern
ment would draw 16 per cent, of the profits. Assuming the extent of partici
pation to be 20 per cent, in all ‘Iraq would thus benefit by getting on the one
hand cheap oil which would be a feature of the bargain and on the o?her a 36
per cent, share on the profits. Incidentally the provision of cheap fuel would
undoubtedly change the face of the railway problem and give a great impetus
to agricultural development and the purchase of machinery. P
Fourthly, it appears to me, to follow from the foregoing that the onlv
L°v T*° * T 0f frank recognition of the eircnmiiances of to
day. Difficulties regarding the acquisition of the site have not yet been sur
“ b ’fi they 'f°"l d r' ,ab ' y disa PP ear if the land were required for the
dock of a refinery of winch the State was part owner. This however awaits the
P P y. he political results would be most unfortunate. Should the Naft
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