Coll 30/216 'Development of oil supplies in the Middle East.' [‎26v] (52/131)

16
(h) The Soviet Government's Request for an Oil Concession.
133. It soon became apparent after the arrival of M. Kavtaradze in Tehran
that the real object of his visit was to negotiate for the granting of an oil
concession in northern Persia. When M. Kavtaradze made his official request
for this concession, the Persian Prime Minister informed him that the Govern
ment had already decided to postpone until after the war the question of granting
oil concessions covering any part of Persia. M. Kavtaradze and the Soviet^
Embassy thereupon put such pressure on the Persian Government that it was^
forced to resign, despite the fact that it had the backing of public opinion. The
new Cabinet followed the same policy as its predecessor in regard to the oil
question, and on the 2nd December, 1944, the Majlis passed a Bill tabled by one
of the Deputies to prevent the Prime Minister or any other member of the
Government from entering into negotiations with any foreign Government or
company or from signing any concession or agreement relating to oil.
134. Foiled in his attempt to secure the concession, M. Kavtaradze left
Tehran for Moscow on the 9th December. It now remains to be seen whether
the Soviet Government will return to the charge.
135. From a survey of the long and extremely complicated history of north
Persian oil, certain points clearly emerge :—<
(i) If any non-Russian firm or group applied for an oil concession in the
north, it seems extremely probable that the Soviet Government would
put such pressure on the Persian Government as to render it most
difficult, if not impossible, for its application to be granted.
(ii) Even if Soviet approval or abstention from opposition could be secured,
any firm attempting to exploit the concession would, if it discovered
large quantities of oil, be confronted with the difficulty of finding a
satisfactory way of transporting this oil. The only natural outlet for
north Persian oil is via the Caucasus, and it seems in the highest
degree unlikely that the Soviet Government would agree to such oil
being transported to western markets via Baku and Batum, since it
would thereby be competing with products from those centres. The
only alternative would be a long and very costly pipe-line over the
Elburz and Zagros mountains to the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. .
(iii) The petroleum requirements of northern Persia would not, in them
selves, be sufficient to justify the heavy expenditure on drilling and
on the erection of a refinery that would be required; moreover, it
must be borne in mind that most of the marketing for this region is
already being done by the A.I.O.C. with products from its Naft-i-Shah
field which are refined at Kermanshah. Furthermore, Soviet-Russian
competition in this market might at any time be revived.
(iv) It would thus seem that north Persian oil could be exploited only by the
Soviet Government or by some Persian or other concern in which
they had a large interest.
XXI .—A fghanistan.
„ 13 . 6 ,. ^ 192 ' the Anglo-Persian Oil Company (as it was then called) was
unomcially oitered a concession covering Afghanistan, but it declined the offer
on the grounds that the Tirpul area near Herat, where there were oil indications
was in the Russian economic sphere and that the inaccessibility of the area made
it commercially unattractive. The Burmah Oil Company and the Anglo-Saxon
Petroleum Company likewise considered the possibility of taking up a concession in
Afghanistan, but they also gave up the idea, because the remoteness of the area
from seaboard would have rendered development work extremely costly while if
oil were found the cost of a pipe-line to some point on the coast of Makran’or
the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. would be very high.
n i'rvi U n( te terre jl these objections, two United States companies, the Sea-
?i! C TT pa J n l° f P elawai T ancJ the Texas Corporation, formed a joint concern
called the Inland Exploration Company of America with a capital of $5,050 333
for the purpose of negotiating for and exploiting a concession in Afghanistan
A concession agreement was signed by representatives of the Afghan Govern
ment and the company m Berlin on the 19th November, 1936. This agreement
was modified in Kabul on the 18th January, 1938, in order to embody certain of
the provisions of the Amiraman Oil Company’s concession in Persia/which were
more favourable to the Government.