Bahrein Celebrates 25 Years Of Oil

Press, Volume XCVI, Issue 28435, 15 November 1957, Page 8

Bahrein Celebrates 25 Years Of Oil

(From a Reuter Correspondent)

BAHREIN (Persian Gulf). Bahrein, the island skeikdom in the Persian Gulf, is this summer celebrating the 25th anniversary of the discovery of oil—and working steadily towards building up a sound alternative economy in preparation for the expected day, 25 years hence, when the island’s wells will have been pumped dry. By 1930, Bahrein had been hit both by world depression and the effects on its ancient pearl industry of Japan’s increasing cultured pearl production. Then, suddenly, almost unexpectedly after seven years of intermittent searching, oil bubbled to the sandy surface of this barren: island on June 1, 1932. Since then, 1 directly or indirectly, oil had touched the lives of each of the 120.000 Bahreins on the island. Known familiarly as “Bapco.” the Bahrein Petroleum Company, an American-owned company registered in Canada, has become tightly interlocked in the island’s daily life. I In addition to the wells, which produce about 30.000 barrels a day.; 'the company has built one of the biggest refineries in the Middle East which is fed by a double pipeline from Saudi Arabia and produces about 210,000 barrels a day. It provides work for 5850 Bahreinis and paid a total of nearly £4.000.000 sterling in royalties to the Bahrein Government last year. It hires cars and trucks from local businessmen, it places building contracts with local firms, it contributes to the island’s roadmaking. it provides training and education for young Bahreinis wanting to work in the oil industry, and it contributes to the island’s health services.

Over the years, new agreements have given the Bahrein government larger and larger shares in the company's profits until today it is on the fifty-fifty basis. “Benevolent Autocrat”

Reference on thj island to “the Government” is generally taken to mean, in the final analysis. Sheikh Sulman Bin Hamad Al Khalifa, aged 62. He has absolute authority, but is generally recognised as a benevolent autocrat who acts on the advice of the expert heads of the various Government departments. When oil was first discovered on Bahrein, the Sheikh was persuaded by his British adviser. Sir Charles Belgrave, who is resigning this year, to accept what was, at that time, a revolutionary proposal. He agreed to share the oil royalties. One-third would go into the Privy Purse, one-third into capital projects for the community

and one-third would be invested against the day when finally the oil would run out. Between 1933 and 1956, the Bahrein Government received a total of about £20,953.367 in oil royalties. Out of this £6,600,000 was invested, mostly in Britain • and India. Roughly another third was spent on capital projects like schools, hospitals, electricity supplies, water schemes and the construction of a new harbour.

Although one-third of the royalties goes to the Privy Purse, it does not mean that the ruler is fabulously wealthy. The Privy Purse is the purse of the ruling family, which totals about 300 persons and among whom the money is divided proportionately, according to seniority. The oil company officials would not make any estimate of the life of the Bahrein oil wells, but Sayed Alawi said: “On present evidence, we expect a further 25 years of oil production from our own wells. But when our wells do finally stop, the refinery will go on, for the reserves of Saudi Arabia are vast.” Asked what sort of Bahrein he envisaged in 25 years’ time, he said: “We want schools for all our children, with a system of compulsory free education. We want hospitals for all, either free or charging a small fee. We want water for the land and hope to tap springs both on the island and others coming up under the sea. off the coast. And when our new harbour is complete, it will be a free port and a centre for commerce in the Gulf.”