Coll 30/216 'Development of oil supplies in the Middle East.' [‎22r] (43/131)

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XII.— Sa'udi Arabia.
(i) At-Hasa and North-Eastern Najd.
50. The Arabian American Oil Company (formerly known as the California
Arabian Standard Oil Company), of Delaware, U.S.A was granted by Ibn Sa ud
a concession valid for 60 years on' the 27th May, 1933 over an area of some
**49,000 square miles in the eastern portion of his realm. I he Standard Ui
Company of California and the Texas Corporation jointly own all the shares in
this company in equal proportions. oon non drnld'* to
51 On signing the concession, the company paid £30,000 (gold) to
Ibn Sa’ud, together with £5,000 (gold) annual rent, payable^until oil m
commercial quantities was found. In 1934 another lump sum Payment ?!
£20,000 (gold) was made. When oil was struck in large quantities in 1938, the
company paid the Government £50,000 on account of royalties and made another
payment of £50,000 a year later. Royalty is at the rate of 4/- (gold) pei ton ol
oil produce that> in due com . sei rising oil production will, by
increasing the royalties, put the finances of the country on a sound tooting.
53 ‘On the'29th May, 1939, the company and Ibn Sa ud signed a supple
mental agreement whereby the company, in return for additional payments
secured the extension of its concession area over parts of ba udi Arabia to the
west of its original zone, together with •'all right, title and interest of the
Government now or hereafter ” in the two neutral zones between ba udi Arabia
on the one hand and Iraq and Kuwait on the other. „„„„„„„
54 After carrying out prospecting work over a wide ai ea, the company
sank succetfnl tesCvelfs at DamJan, on*the coast of the Persian Oulf south-east
of Qatif, and proved the existence of a very rich field; production is now (194o)
at the rate of 600,000 tons a year, but the potential production is believed to be at
least ten times as large. Oil has also been struck at Abu Kadriya, 90 miles north
west of Qatif and 12 miles west of the inlet of Musallamiya, and at Abqa.iq,
35 miles south-west of Damman. There are understood to be other promising
structures in the concession area. ^ ^
55. A pipe-line has been constructed from the Damman field to
Ras at-Tanura, on the coast, where there are facilities for loading tankers, borne
of the crude oil produced is treated at a local topping plant with a capacity ot
120 000 tons a year, while the rest is taken to Bahrain for processing m the
refinery of the Bahrain Petroleum Company. A refinery with a capacity ot
2 500,000 tons a year is under construction 5 miles from Ras at-lanura.
’ 56 What is likely to prove not only a cause of friction between ba udi
Arabia and her neighbours, but also a serious handicap to the smooth and rapid
development of the oil resources in those countries, is the almost total lack ol
demarcated frontiers between them. In fact, a difterence of opinion as to where
the true frontier lies between Sa’udi Arabia and Qatar has already gi veI ^ rise
to a dispute regarding a possible oil-producing area m the south of the Qatar
peninsula.
(ii) The Hijaz.
57. In 1926 the Idrisi, the then ruler of Asir, granted a concession to a
Mr Cooper covering the Parasan islands. Cooper sold this concession later to
the Anglo-Saxon Petroleum Co., a subsidiary of the Royal Dutch-Shell group,
which formed the Red Sea Petroleum Company to work it. Some drilling was
done on Zifaf island, but the company encountered such difficulties with the Idnsi
that it abandoned the enterprise in 1928. . . T <-j
58 In 1938 Petroleum Development (Western Arabia), Ltd., an associated
comnanv of the I P.C., obtained a concession from Ibn Sa’ud covering the western
part of the Hiiaz to a depth of 100 kilometres from the coast, together with the
Farasan and some other islands in the Red Sea. The company drilled a number
of wells on Zifaf and on some of the other Farasan islands, but failed to find
anv oil The concession was abandoned in 1943
59. According to a recent press report (as yet unconfirmed), American
interests are now negotiating for a concession covering the llijaz.
(iii) Asir.
60. In 1931 Geologists of the A.I.O.C. examined Asir. They considered
that the prospects of finding petroleum, though not entirely non-existent, were
remote. Drilling would be very speculative.