مجموعة ٢١/١٧ "النفط في العراق" [و‎‎٧‎١] (١٧٨/١٤١)

7
THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY’S GOVERNMENT
EASTERN (Iraq).
CONFIDENTIAL.
[E 7930/84/93]
Sir F. Humphrys to Sir John Simon.—(Received December 27.)
(No. 780. Secret.)
Bagdad, December 13, 1933.
’ LORD GLENCONNER, who was appointed general manager of the Mosul
Oil-fields last July, arrived in Bagdad on a tour of inspection on the
15th November and left on the 8th December. While in Bagdad he had several
interviews with Rustam Beg Haidar, Minister of Economics and Communications,
and Nuri Pasha, on the subject of the operations of the company, and, particu
larly, in regard to the payment of the instalment of dead rent, amounting to
£125,000 gold, equivalent to about £190,000, in accordance with article 10 of the
convention, which is due on the 1st January.
2. Lord Glenconner informed me that the company were not in a position to
raise fresh capital on the London market until the value of their concession had
been proved; in other words, until oil of a marketable quality had been struck.
Three rigs had been erected in the Mosul Province and drilling had already
reached a depth of about 120 feet. He said that he had arranged for a cable to
be sent to him from London each week reporting progress, but it was, of course,
open to doubt whether oil would be struck by the 31st March, on which date the
period of grace for payment of next year’s dead rent to the Iraqi Government
would expire.
3. Lord Glenconner informed me that he had spoken very frankly to Rustam
Haidar about the company's position, and he said that, if the prospects of the
company did not greatly improve by the 31st March, they would have to default
over payment of the dead rent unless they were granted an extension of time.
This would mean, under article 15 (i), that the Government would have the right
of cancelling the concession. Lord Glenconner told me that he had informed
Rustam Haidar that, if an extension of time were granted, the company would
be prepared to work at least twice as many rigs this year as they were required
to do under the agreement, and he said that if the concession were cancelled he
did not think that the Iraqi Government would find any other foreign company
who would be willing to conclude an agreement on such onerous terms as had
been accepted by the British Oil Development Company.
4. I pointed out to Lord Glenconner that it was possible that, if there was
default over the payment due next March and the concession was cancelled, the
Government might employ foreign experts at their own expense to drill in selected
areas west of the Tigris, and if oil of a suitable quality was discovered they might
put up the concession for tenders again in the hope of obtaining at least equally
favourable terms, after pocketing a year’s dead rent from the British Oil Develop
ment Company and taking over all their gear for nothing.
5. The question of a pipe-line to the Mediterranean was also touched upon
in my conversations with Lord Glenconner, who told me that his Italian and
German colleagues on the board were in favour of constructing a pipe-line to
Alexandretta. The cost, he said, was estimated at about 3 millions and the
Germans hoped to obtain the bulk of the contract for the pipes. I told him that
my personal opinion was that the country through which such a pipe-line would
pass was one of the most potentially disturbed areas in the Middle East and that
the security from a British point of view was nil. I thought that it would be in
the ultimate interests of the Mosul Oilfields Company to come to an arrangement
with the Iraq Petroleum Company for the use on commercial terms of their pipe
line to Haifa, and remarked that wherever oil might be struck in his company’s
concessional area it should not be very costly to join up with the Iraq Petroleum
Company’s pipe-line, which was liable to be duplicated if the world conditions of
the oil industry permitted.
I have, &c.
F. H. HUMPHRYS.
[991 dd—1]