Subject: Oil concessions in the Middle East.
[Enclosure]
Memorandum by the Department of
State
The situation with respect to oil concessions in the Middle East is
as follows:
Iraq Petroleum Company (whose shares are owned
23.75% each by the following four companies:
- 1.
- Anglo-Iranian Oil Company (owned
56% by British Government)
- 2.
- Shell Oil Company (believed
controlled to some extent by British Government)
- 3.
- Société Française des Pétroles
(owned in large part by French Government. Now controlled by
Alien Property Custodian, London)
- 4.
- Near East Development Corporation
(owned in equal part by Socony-Vacuum Oil
Company and Standard Oil of New
Jersey [)]
The remaining 5% of the shares of the Iraq Petroleum Company are held
by Mr. G. S. Gulbenkian.
In its own name, or through subsidiaries, the Iraq Petroleum Company
holds concessions in all of Iraq, in all of the Peninsula of Qatar,
as well as in certain areas of Syria, Palestine and Trans-Jordan and possibly in other
territories along the eastern and southern coasts of the Arabian
Peninsula. Production, which is active only in Iraq, is pumped to
Haifa, Palestine, where there is a refinery, and to Tripoli,
Syria.
Anglo-Iranian Oil Company. In addition to its
holdings in the Iraq Petroleum Company, the Anglo-Iranian holds an
important concession in Iran and has a large refinery at Abadan.
Bahrein Petroleum Company is owned in equal
shares by Standard Oil Company of California and the Texas Company.
It has production and a refinery on Bahrein Island in the Persian
Gulf.
California-Arabian Oil Company, also owned by
the Standard of California and Texas Company. It has immense
holdings in Saudi Arabia, with reserves of possibly fifty billion
barrels. Present production, which is small, is refined at
Bahrein.
Kuwait Oil Company, owned in equal shares by
the Anglo-Iranian Oil Company and the Gulf Oil Company of
Pennsylvania. This company’s concession in Kuwait (or Koweit) at
head of Persian Gulf has been proved to the extent of nine or ten
billion barrels. Drilling was stopped over a year ago by order of
British military authorities.
All of the companies mentioned above have small concessions in
Egypt.
In view of military needs, it has been proposed to erect refineries
at one of the following places:
- 1.
- At Dhahran in Saudi Arabia, opposite northern end of
Bahrein Island, under arrangements with California Arabian
Standard Oil Company.
- 2.
- At Kuwait, under arrangements with the Gulf Oil Company
(presumably in agreement with its partner, the Anglo-Iranian
Oil Company).
- 3.
- At Bombay or some other port in India, under arrangements
with the Standard-Vacuum Oil Company. Presumably production
would come from the Iraq Petroleum Company field in the
Qatar Peninsula. The two wells drilled there were blown up
over a year ago under orders of the British military
authorities.
Whatever course is adopted, the question arises whether it is better
for the United States Government to purchase shares in the producing
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companies or to make
some other arrangement, such as purchasing options on a given
quantity of oil in the ground. This question is under review by the
Petroleum Reserves Corporation.
In general American companies holding interests in the Middle Eastern
area desire to produce. The Anglo-Iranian Oil Company, on the other
hand, with its large field in Iran, is inclined to restrict
production in other areas. This and other questions make it
desirable that some general understanding be reached between the
British and American Governments regarding Middle Eastern petroleum
questions. A draft of such an agreement is being considered in the
Department and has been furnished informally to other interested
departments for their consideration and suggestions.2
(See map attached)3
