File 1421/1908 Pt 3 'Persia: oil; negotiations between the Shaikh of Mohammerah and the Anglo-Persian Oil Co.' [‎257r] (79/338)

of mineral rights generally in Mohammerah territory, His Majesty’s Government
won < be a good deal embarrassed to decide what attitude to adopt towards it, and it
would further seem to me probable that in regard to the larger question, British interests
might be found to he in the opposite direction to the interests of the company in the
^Tirticular project under consideration.
/What I mean is this. It would apparently be much more to our advantage,
having regard to the strong position which we occupy with reference to the ruler of
Mohammerah, to contend that the sheikh did enjoy “ mineral rights” in his territory
in which case any future exploitation of minerals therein would, if we maintain our
present predomment influence, naturally fall to British enterprise alone, rather than to
Concede that the central Government possessed the said rights, in which event the
possibility ot their placing some mining concession in Arabistan in a foreign quarter
ovei the heads of the sheikh and ourselves, could not be precluded. ’
But my suggestion is that the right to allow boring for oil is not necessarily, if
usually, included m the term “ mineral rights,” and that it is at all events advisable in
this case ^ to disassociate the two if possible; and secondly, that it would be to the
company s own interests not to raise the specific issue or dissect the question of the
sheikhs precise rights, in either case in the present connection, but to have recourse to
the alternative of an amicable compromise with him.
_ 5. Speaking of the form which an amicable arrangement might take, the managing
director suggests that the company might pay the sheikh the surface value of the
ground taken up and allow him something equivalent to 3 per cent, on the profits derived
from the sale of the crude oil extracted in his territory, the figures of the company to
be based on the pi ice paid for the crude oil to the Bakhtiari Oil Company, and to be
accepted without question by the sheikh.
I find it difficult to express an opinion as to the fairness of this offer, or as to
whether, if the sheikh leferred to us for advice, as he would be sure to do, it would be
one which we could pi ess him to accept without fuller knowledge of the portent and
probable results in practice of the arrangements in operation with the Bakhtiaris.
Perhaps the managing director or the company’s agents would kindly supply further
information on these points. I gather that the Bakhtiaris company and the
exploitation company are merely offshoots of the main company without any separate
interests, and, if so, it would seem that the business interests of the Anglo-Persian Oil
Company would lie in working the Bakhtiari company at no profit; the profit only
occurring at the stage where the oil came to be handled by the parent company.
I quite sympathise with the latter. Having paid their price to the central
Government for their concession, they naturally resent being called upon to repeat
payments in other quarters for their privileges; but in this case we have to deal not
with abstract truths, but with the actual conditions represented by an impotent
central Government and an Arab sheikh enjoying a large measure of administrative
independence. The effect of these conditions is to my mind that the company’s best
interests would suffer, and our national interests as well, if they are to pursue their
enterprise through the Persian Government in spite of the sheikh ; and that, in the
particular matter under reference, the sheikh would certainly ask our advice upon the
terms offered him by the company. It is clearly necessary, therefore, that we should
understand fully the real value to him of the terms offered, and that they should
be such that, if referred to, we could honestly advise the sheikh that his interests were
met thereby, and that he should accept them in satisfaction.
6 . This is the aspect in which the questions at issue present themselves to me,
and I shall be glad if you will communicate my views to the company’s agents at
Mohammerah with my compliments, asking at the same time that it be understood
that they are given with diffidence for what they are worth, and that I am quite
unable to conjecture how far His Majesty’s Government would or would not be
inclined to endorse them. They are based on the belief that in their treatment of
the rulers of Mohammerah, with whom, throughout the life of their distinguished enter
prise, they will presumably be in the closest direct intercourse, a policy of dignified
conciliation, within reasonable limits, will serve the permanent interests of the Anglo-
Persian Oil Company, as well as our natural interests, present and future, far better
than one of a contrary character.
I have, &c.
P. Z. COX, Lieutenant-Colonel, Political
Resident in the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. ,
[1845 6—1]
C