File 1421/1908 Pt 3 'Persia: oil; negotiations between the Shaikh of Mohammerah and the Anglo-Persian Oil Co.' [‎319v] (204/338)

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J. B. Lloyd, the Agent of the Oil Company. We arrived there by steam launch
on Sunday i ith instant and the negotiations occupied the ensuing 5 days.
This being the first important Agreement which the Sheikh had ever entered
into with a European Company, it was not surprising that he should feel that he
was breaking new ground in which innumerable pit-falls might be awaiting him.
He was consequently extremely nervous and apprehensive, with the result that
every petty detail of the Agreement had to be dissected and discussed and re
discussed ad/.auseam. It was owing to this fact that it had to be entirely
altered in form.
By Thursday evening, after four sittings, everything regarding which Mr.
Lloyd and he could be brought to an understanding on business lines had been
adjusted, and there remained only the three cardinal points about which the
joint arguments of Mr. Lloyd and myself as on behalf of the Company were
unavailing. At this stage Mr. Lloyd retired from the discussion in order to mark
the fact that as far as the Oil Company were concerned he had gone as far as he
could, and to let the Sheikh see that he must either come to an understanding
on such advice, on behalf of Government, as I might give him, or else adjourn the
negotiations pending further correspondence with London.
The three points of difference alluded to were—
(i) The question of the concurrency of the present Agreement with the
parent Concession, on which the Company insisted.
(ii) The Sheikh’s demand for the substitution of the words “ sons and
lineal descendants ” for the words “ heirs and successors ” both in
the Preamble and in Article 18.
(iii) The question of the reversion of the existing buildings to the Sheikh
on the expiry of the Concession.
They are most convenient to handle in the above order.
As regards’( 0 * The Sheikh pressed perseveringly for the retention of
the stipulation inserted by him in his preliminary agreement to the effect
that at the expiry of the original period of the Company’s Concession the
possession of the land and buildings should lapse to himself or his heirs, and
should in the event of a renewal or extension be leased by the Company
from him. That stipulation, it will be remembered, was rejected altogether by
the Company and the joint negotiations of Mr. Lloyd and myself had reached
a stage at which the Sheikh had consented primd facte to drop the question of
lease and to let the agreement be concurrent in consideration of a substantial
advance in the figure of the rental for the second or any subsequent period.
In negotiating this latter point Mr. Lloyd had risen in conversation from
^1,000 to ^1,300 and informed the Sheikh that he could not go beyond that.
On retiring from the deliberations, however, he gave me authority, should I see
fit to use it in order to ensure completion of the Agreement without recourse to
further reference home, to raise the figure to ^1,500.
This I had to do by gradual stages, and the point was eventually settled at
that figure.
As regards (ii). I beg to refer to the penultimate paragraph of my letter
of 16th May to the Sheikh, enclosed with my Despatch No. 55—1391, of 12th
June to His Majesty’s Minister, which will doubtless have reached the Foreign
Office before this communication. It will be seen that the Sheikh then pressed
for the substitution of these words, or their equivalent, in our assurances to him;
and he evidently saw his opportunity in the negotiating of this Agreement
between himself and the Gil Company under our auspices, to get us indirectly
committed to a dynastic guarantee. I had discussed the point repeatedly with
him in the presence of Mr. Lloyd, endeavouring to make the Sheikh understand
that the point was purely a political one already under correspondence and that
he had no reasonable excuse for attempting to introduce a controversial political
question of this nature into a purely commercial agreement with the Oil Company
who were simply concerned to be assured that their Agreement would hold
good both for his time and that of his successors. Who those successors might
be was no concern of the Oil Company, and they could not be expected to make