886D.2553/4–2552
No. 253
Memorandum of Conversation, by David Longanecker of the Office of
African Affairs
Subject:
- Discussion of American Independent Oil Company Operations in the Neutral Zone.
Participants:
- NE—Mr. Jones
- NE—Mr. Awalt
- NE—Mr. Funkhouser
- AF—Mr. Longanecker
- Mr. Harley Stevens—American Independent Oil Company
Following a brief summary of observations relating to current political conditions in the Persian Gulf area, Mr. Stevens stated that he had three specific items to discuss with the Department.
The first item concerned the status of the company’s drilling operations. Their fifth exploratory well is down to 4500 feet and prospects at this stage are not too promising. The well is being drilled about five miles south of Khor Mufada, in the southeastern corner of the Neutral Zone, about sixteen miles above the Saudi Arabian border and within sight of the Gulf. If this is another dry hole, some of the stockholders in the American Independent Oil Company (hereinafter referred to as Aminco) may be disposed to withdraw from the company. Any stockholders in Aminco who wish to withdraw must give the other stockholders the first option to purchase their stock participation. Mr. Stevens feels that the Phillips Petroleum Corporation, by far the largest stockholder in Aminco, will wish to continue exploration in the Neutral Zone, at least until the completion of exploration wells in each of four remaining promising structures. He feels that one location which should be tested lies due south of the Brughan field in Kuwait, just across the border in the Neutral Zone, which would seem to be located on the natural extension of the Burghan producing basin. Mr. Stevens also feels that Aminco’s equal partner, the Pacific Western Oil Company, which holds a concession from SAG for the latter’s half interest in the Neutral Zone, will also wish to continue operations in the Neutral Zone even if the fifth exploration well now being drilled turns out to be a dry hole.
. . . . . . .
[Page 592]After some discussion of the point, it was decided that the proper course of procedure for Mr. Stevens is to approach Colonel Drake of the Gulf Oil Corporation, the American partner in the Kuwait Oil Company, for the desired information. Mr. Stevens felt that this procedure would be successful and, if not, he would communicate again with the Department. It was agreed also that in the latter event the Department might appropriately take the matter up with the British Foreign Office, suggesting that it would appear to be appropriate for the Foreign Office to assist Mr. Stevens in this matter.
With respect to the islands previously mentioned, Mr. Stevens stated that Aminco intended to keep them within its concession as long as possible, but must either give them up or begin drilling on them within three years. Another provision requires the company to pay the Sheik $50,000 at the end of five years. Either of these two obligations, depending upon circumstances existing at the time these periods approach an end, may decide the company to release the islands from the concession.
Mr. Jones asked whether Mr. Stevens has heard any reports or has any opinions on whether the British are thinking or working on a confederation of the Shiekdoms in the Persian Gulf area. Mr. Stevens said he feels that there is something going on along this line but does not have any clear ideas on the subject. There may be some ideas of bringing about a confederation of Iraq and Kuwait which would seem to be one of the more logical combinations. Whether current ideas go beyond this point he does not know. He does feel that the British are very anxious to consolidate their position in this last remaining stronghold of British economic interest.
- This memorandum of conversation was prepared on May 7.↩