"D.178 86/13-III المنطقة المحايدة في الكويت" [و‎‎٢‎٢‎٨] (٦٠٢/٤٥٥)

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Ext. r )S 0 A 8
SECRET
d&dS 4
Commonwealth Relations Office,
Downing Street,
Whitehall,
London, S.W.l*
,!) r.^arch, I9Z18.
At a recent inter-depe.rtmental meeting with the Ministry of Fuel
and Power and the Foreign Office the position regarding bids for the
petroleum rights in the Koweit Neutral Pone was reviewed and the
question whether it would be desirable to try to influence the Sheikh
in favour of a particular oil company or group of companies was
specially considered.
^ v<iS generally felt that the increase in the bidding was such
thc't the large sums involved might soon be incommensurate with the
oil prospects of the area.' There mgy however be companies having as
yet no concessions in the Middle East which may still wish to raise
the stakes; and clearly N.N.G. is not in a position to influence the
/merican companies in deciding how much they are prepared to offer^
■■ ..c should be interested to know whether you consider it likely that the
j Sheikh may close the bidding at an early date or prolong the auction
I for an undefined period.
3 « The latest definite bid of whi-ch wc have information is that of the
Amerada Petroleum Corporation, which offered an initial payment of
£ 3 A million, a minimum annual payment of # 500 r 000 and a royalty of 25
cents per barrel, have recently heard that if Amerada succeed in
gaining the concession, it will be joined by the Continental Oil Company
and the Seaboard Oil Company, both of which have been successful in
their operations in U.S.A. Fe are advised that Amerada, in conjunction
v/ith^the other two companies, would make a strong team and have
sufiicient assets, knowledge and ability to make a success of developing
the concession.
/+• Fe do not know whether Gulf Oil Corporation intend to advance its
latest 01f«r. However, as you are aware, it has been mutually agreed
between the Anglo-Iranian Oil Company and the Corporation that if.
exther of them should obtain Kowoit♦s rights in the Neutral Zone it
would share them equally with the other. For the present the A.I.O.C.
are debarred from bidding even as an equal partner with the Gulf Oil
Corporation in the Koweit Oil Company. This•position may alter when
*'^ -Line Agreement is revised, negotiations regarding which are still
proceeding, though it appears unlikely that any settlement will be
reached for three or four months at the earliest.
_5 • By the time you receive this letter you will no doubt have seen
Abraham, who will have explained to you the Burmah Oil Company’s
intention to increase its previous bid and its readiness to go up to
£ 1 , 000 , 000 . Before leaving here Abraham remarked that, if unsuccessful,
he would, after his return to the U.K., probably approach Gulf with the
object of endeavouring to arrange a tripartite agreement between Gulf,
A.T.O.C., and B.O.C., with the purpose of acquiring jointly the Koweit
share of the rights in the Neutral Zone. We have no indication whether
A.I.O.C. and. Gulf would look favourably on this grouping of companies,
v.’hich as far as we are concerned would seem quite a good arrangement.
Fe/
Lt. Col. Sir R. Hay, K.C.I.E., C.S.I.,
Persian Gulf Residency,
Bahrein.
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