'File 5/1 XIV Kuwait Oil Company' [‎229v] (468/570)

4
company, and sent to the Governor for consideration, in the meantime, 1 etroleum
Concessions (Limited) have been given permission to send an expioiation party to
the Protectorate (see also note under Muscat and Oman ).
Saudi Arabia: (i) Red Sea Area.
21 The petroleum rights in this area were granted to Petroleum Concessions
(Limited) on the 9th July, 1936. The concession runs for a period of sixty years
and covers the whole of the Red Sea coast of Saudi Arabia to a depth of 100 kilom.
(together with the Farsan and other islands and territorial waters). Prospecting
work has been carried out by Petroleum Development (Western Arabia) (Limited)
the local operating company of Petroleum Concessions (Limited) but with the
exception of the Farsan Islands and a very small stretch of the coast the results
have been disappointing.
Saudi Arabia: (ii) Nejd.
22. (a) Hasa .—The oil rights in this area were conceded to the Standard
Oil Companv of California by Ibn Saud on the 2/th May, 1933. The con
cession has since been transferred to the California Arabian Standuid Oil
Company, a subsidiary company, the share capital of which is wholly owned by
Standard Oil Company of California and the Texas Corporation equally. The
concession runs for a period of sixty years. 1 he area of the concession as set out
in the relevant article of the concession agreement is as follows :
“All of Eastern Saudi Arabia, from its eastern boundary (including
islands and territorial waters), westward to the westerly edge of the Dahana,
and from the northern boundary to the southern boundary of Saudi Arabia,
provided that from the northern end of the westerly edge of the Dahana the
westerly boundary of the area in question shall continue in a straight line
north, 30 degrees west, to the northern boundary of Saudi Arabia, and from
the southern end of the westerly edge of the Dahana, such boundary shall
continue in a straight line south, 30 degrees east, to the southern boundary
of Saudi Arabia.”
23. Drilling has been carried out by the company and some oil has been
found. It has recently been reported that a well giving 3,400 barrels of oil per
day has been brought in. Some of the oil from Hasa is being taken to Bahiein
for refining. It is also understood that plans for the development of a port
on the Hasa coast are under consideration and that the necessary chart
will shortly be prepared by the Admiralty on the basis of information supplied
by the company as the result of a survey carried out by them.
24. (b) Remainder of Nejd .—The position as regards oil exploration rights
in territory of Saudi Arabia not included in the Red Sea area or Hasa aiea
concessions, referred to above, is uncertain. It was believed at the time that the
Hasa concession agreement had been supplemented by a special agreement or
“ secret clause,” giving the Standard Oil Company of California some kind of
an option on this territory, but details were lacking.
25. Information has recently been received, however, which points to
the probability that on the 29th May, 1933. the Saudi Arabian Government and the
company agreed upon a modified form of the concession signed on the
27th May (referred to in paragraph 22), the modifications consisting of the addi
tion of two extra articles, numbered respectively 3 and 7, which have been inserted
in their appropriate positions in the body of the original agreement of the
27th May, the subsequent articles being appropriately renumbered, and a revised
version of the (renumbered) article 35.
26. The effect inter alia of these additional articles (or special agreement)
is to accord to the Standard Oil Company of California—
“ a preference right to acquire an oil concession covering the balance of
Eastern Saudi Arabia extending as far west of the westerly boundary of the
exclusive area (i.e., the Hasa concession area) as the contact between the
sedimentary and igneous formations. '
His Majesty’s Government are not at present aware whether or where
this “ contact line ’’ has been established. There is presumably an area uncovered
by any concession or preference rights between the “ contact line,’' wherever tha
may be, and the eastern boundary of the Red Sea concession.
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