File 3877/1912 Pt 1 ‘Turkey in Asia: oil concessions’ [‎303v] (615/834)

proceed with development.
4 The Agreement and the amended Articles of Association P r0 T ld ® fo ^ the
appointment oftwo ex otficw directors by the Treasury, one of whom will be chosen
to represent the Admiralty directly. . , 11 ti.rij.il but with
To enable Government interests in the Company to be duly protectea Due witn
the minimum of interference with the conduct of its ordinary business a power of veto
over all acts of the Board and Committees of the Company and its subsidiaries is
conferred upon the two ex officio directors, with right secured to the other directors to
appeal to His Majesty’s Government as represented by the Treasury and the Admiralty.
His Majesty’s Government do not, however, surrender their right to be represente
on the Board by a larger number of directors proportionate to their share m the
Company, if such a step should become necessary at any future time.
His Maiesty’s Government have given an assurance to the Company that this veto
will be exercised with due regard to the financial and commercial interests yt the
Company, and only in respect of matters of general policy, such as the supervision ot
the activities of the Company as they may affect questions of foreign and military
policy, any proposed sale of the undertaking or change of status of the Company, and
new exploitation and other matters directly bearing on the fulfilment of current
contracts for the Admiralty.
5 . The capital furnished by His Majesty’s Government will be issued in instalments
as required, and is intended to provide for such development of resources and exten
sion of facilities as may be necessary to secure an abundant quantity of oil for naval
purposes over a term of upwards of twenty years. Ihe Company have furnished full
particulars of all pertinent matters relating to their financial position and prospects
as well as preliminary estimates of expenditure and a scheme of development. No
provision is included in the Parliamentary Bill for the exercise of the option of
redemption of debentures in 1920 referred to above, which will have to be submitted to
Parliament if and when His Majesty’s Government decide to redeem the debentures.
Purchases of oil for the Admiralty will continue to be a charge to naval votes.
6 . The report of Admiral Slade’s Commission indicates that, with judicious working
and control, the Company’s Concession may be expected to produce abundant supplies
of oil over a long period of years. The Concession is a very large one, with good
indications of oil in many places other than those at present being worked, and
existing wells have proved productive and of good durability. The Admiralty has
for some years past kept touch with the development of exploitation in this region, and
has had the advantage also of considering the evidence on this subject given before the
Boyal Commission on Fuel and Engines, of which Admiral of the Fleet Lord Fisher of
Kilverstone was Chairman. This evidence is confirmed by the investigations of
Admiral Slade’s Commission. As shown in paragraph 35 of the report of the latter
Commission, some of the Company’s wells have been “throttled down” to keep the
production within the limits of current requirements and the capacity of the existing
pipe-line, and it may be added that the policy adopted in the development of the field
has been to drill the wells only to such depth as to prove the continuity of the oil-
bearing formation without actually bringing them into production. The statistics of
production up to September 1913 given in the report simply indicate the limited
quantity of oil which has been allowed to flow from a few of the wells, and are in no
sense a measure of what the Company’s output might be expected to amount to if the
whole of the existing wells were brought into full productivity, still less of the possible
maximum output when additional wells are drilled. Information has quite recently
come to hand showing that one of the wells from which supplies have long been
drawn has suddenly begun to spout with great violence, with the result that this well
alone yields more oil than the present pipe-line is capable of transporting. It has,
therefore, become necessary, in order to minimise the loss of oil, to undertake very
considerable extension of the transport, storage, and refining facilities with the least
possible delay. The favourable anticipation expressed by Admiral Slade’s Commission
as to the aggregate resources of the Company’s Concession has thus already received
considerable support.