ANGLO-PERSIAN OIL.

Sun (Christchurch), Volume I, Issue 155, 6 August 1914, Page 9

ANGLO-PERSIAN OIL.

SQUEEZING OF TRUSTS FRUSTRATED BY ADMIRALTY. EELATION TO BUEMAH OIL CO. The Anglo-Persian Oil Co. is an offshoot of the British-owned Burmah Oil Co. The oil producing area over which the Anglo-Persian Oil Co. has concessions is about 500,000 square miles, which is nearly six times the size of Victoria. The oil wells now worked by the company are sufficient to meet, "'the present requirements of the Admiralty, and it is believed that future developments in this vast area will hav-e some effect on the world's supply of oil. The oil obtained in Persia is of a very good quality. The Admiralty has undertaken to pay the company £2,000,000 which will be used in actual development work, the money being paid out in instalments for plant and work. The Admiralty is also to spend £200,000 in the purchase of the company's debentures. It will have power to appoint ex:oflicio directors, who will have the power of veto, or it can appoint a numerical majority of the directors on the board. The terms of the supply contract between the company and the Admiralty have not been disclosed, as matters of this kind are always kept secret by the Admiralty. But most of the profits made by the company out of the Admiralty's contract .for the supply of oil, will go to the British Chancellor of the Exchequer, as the largest holder of shares in the company. In addition, the company will supply other customers with oil, and will also manufacture the by-products of p-etroleum, the .most important of which is petrol. The wells which are now being worked by the company are 150 miles inland from the head of the Persian Gulf, and a pipe line has been constructed from the wells to the coast. The question of the protection of the wejls and the pipe line, is oue of some delicacy and might lead to serious complications in the event of Persia being engaged in war, or in the event of strained relations' between Russia and Great Britain with regard to Persia. For the present, payments are being made to the Persian tribesmen to protect the pipe line where it runs through territory occupied by them. WHY GO TO PERSIA? Some astonishment has been expressed at the action of the Admiralty in going outside the British Empire to encourage the production of oil. The reason for this is that Persia has the only oil fields, outside the control of the oil trusts, which can meet the Admiralty's immediate requirements. In every other part of the world where oil is plentiful the trusts are strongly in evidence. Mr Churchill declared in the House of Commons that if the Admiralty had waited another year, before entering into negotiations with the Anglo-Persian Oil Company, it would have been too late, as the company would have been absorbed' By one of the trusts. The most important factor in the world's supply of oil is the Standard Oil Company in America, which, in spite of antitrust legislation in the United States, continues to control the oil industry in that country. It has also extensive interests i.u Mexico uud in other parts of the world. But. the ramifications of the other oil trust, represented by the combination of the Shell Transport Company, and the Royal Dutch Company, are even more extensive than those of the Standard Oil Company, though the quantity of oil handled is less. Apart from these two great trusts, which work in friendly agreement, the only oil companies of anv consequence are the Mexican Eagle Company (in which the British firm of S. Pearson and Son, Ltd. hold a controlling interest) and the British-owned Burmah Oil Company. , For the time in history the British Government has entered into a commercial enterprise in competition with private interests (writes the London correspondent of the Melbourne "Age.") This in itself is remarkable, in a country where private interests have always been strongly represented in Par- ]

liament, and have-made common cause in opposing andTidieuling .suggestions that the State should enter into commercial or industrial enterprises for the

purpose of supplying its own requirements. But so overwhelming was the ease which Mr Winston Churchill, the First Lord-of the Admiralty, made out in the House of Commons for the action of the British Government in deciding to purchase a controlling interest in the oil fields in Persia,, owned by the AngloPersian Oil Company, that the only opposition to it from the commercial point of view came from a member who is a director of the Shell Transport. Company, which, with the Standard Oil Company, practically controls the world 'a output of oil. Included in the British Navy are 250 warships of different classes, which are wholly or partly dependent on oil. These vessels are comparative! recent additions to the fleet, and at iirst the Admiralty was able to obtain oil for them at a price which, allowing for the greater energy of oil, worked out ap,rroximately at the same cost as coaJ. But within the past few years the Admiralty, like private consumers of oil, has- experienced, in the words of Mr ■Churchill, "a long, steady squeeze" on the part of the oil trusts. The price of oil to-day is more than double what is was a few years ago. ."We have no quarrel with the Shell Transport Company," said Mr Churchill, speaking on behalf of the Admiralty, in the House of Commons, when the proposal to purchase a controlling interest in the Anglo-Persian Oil Company was brought forward. "We have always found them courteous, considerate, ready to oblige, anxious to serve the Admiralty, and to promote the interests of the British Navy and the British Empire — at a price. The only difficulty has been price. On that point, of course, we have been treated with the full rigour of the game. "■ ADMIRALTY'S REAL OBJECT. The increase in the price of oil is not the result of the operation of the law of supply and demand. There has been in recent years a continuous increase in the demand for oil, and particularly petrol—a by-product of petroleum; but there has also been a corresponding increase in the supply. The world's production of crude petroleum has been increasing each year. In 1906 it was 212,912,860 barrels, but by 1911 it had increased to :545,512,185 barrels, and in 1912 to over 352,000,000 barrels. About 60 per cent, of the world's supply comes from the United States. The other oilproducing countries include Mexico, Russia, Rumania, Persia, India, Egypt, Trinidad, Borneo, Sumatra, Java, and Sarawak. The main object of the British Admiralty in securing a controlling interest in the Anglo-Persian Oil Company is not to ensure supplies of oil in time of war, but to obtain release from the tentacles of the oil trusts. The Admiraltv has supplies of oil at various naval'ports of the United . Kingdom, which will be sufficient to last several months in the event of war. And as long as the British Navy holds command of the seas in time of war there will be no difficulty about obtaining oil from other countries. Th<e problem which the Admiralty has undertaken to solve by entering into the oil trade is not a problem of war, but a problem of price. For the present the Admiralty will draw from the Anglo-Persiau Oil Company only half its requirements, and will buy the balance from private j interests, but it will distribute its custom iu a way which will be calculated to encourage the production of oil within the British Empire. Encouragement will also be given to scientific experiments for the manufacture of liquid fuel from shale and coal, so as to ensure a home supply of oil. But if there is any danger of the Admiralty being squeezed by j tlie oil trusts, as has been the case, in the past, it will at once increase its supplies from the Persian fields at its own command. i ■ ■■■ ■ ■ ■■ i