Persian Oil

Hawke's Bay Tribune, Volume XIII, Issue 284, 16 November 1923, Page 5

Persian Oil

Government’s Interests DUTCH NEGOTIATIONS. NO DECISION REACHED. » (Received 16. 12.40 p.m.) , London, Nov. 15. Rumours recently circulated that the Royal Dutch Shell group was negotiating for the purchase of the British Government’s extensive holding of Anglo-Persian Oil Company’s shares, formed the subject of a question in the House of Commons. Mr. Neville Chamberlain admitted that the proposal for acquisition had been under consideration for some time. The Government had not yet reached a decision, and no step was contemplated by the Government which w'ould jeopardise the supply of oil fuel to the Navy or mercantile marine.— (Reuter.)

The modern story of oil in Persia to date is almost exclusively the story-of the Anglo-Persian Oil Company, for no other interests are represented there in producing, refining, or selling. Title to something over a half interest in the Anglo-Persian Company rests with the British Government, while the Persian Government and a group of its subjects are partners in any profits made. Jhe pioneer to whom credit is due for this present general interest in Persian oil was the British subject named William Knox d’Arcy, who journeyed into the Bakhtiari Hills more than 20 years ago in a search for petroleum. After varied negotiations, he received from the Shah, in May, 1901, a concession carrying the exclusive right for 60 years to drill for, produce, pipe, and carry away oil and petroleum products throughout the whole Persian Empire, with the exception of the provinces of Azerbaijan, Ghilan, Mazanderan, Astrabad, and Khorassan. This concession covered 500,000 square miles in area, and comprised about the southern threequarters of Persia, reserving to the Government 16 per cent, of the net profits derived from operations under the concession.

In 1902 the Anglo-Persian Oil Compand (Ltd.) was formed with a capital consisting of 5,000,000 dollars fullypaid ordinary shares and 5,000,000 dollars in cumulative‘6 per cent, participating preference shares. The company has power to create debenture stock to the extent of half the share capital. The present capitalisation is approximately 98,775,000 dollars. Fifty miles north-east of Ahwaz. on the Karun river, is Maidun-i-Naftun, the main producing field. Following a series of somewhat disapperinting results, when, it is said, serious thought of abandoning the whole project had been entertained, "d’Arcy, who had heard of oil seepages in the vicinity of Shuster, sent men to examine them in spite of much local native opposition, and in consequence of the favourable reports received drilling was undertaken. The oil sand was reached in the first well at 1100 ft. Oil flowed athigh pressure, and reached a height of 70ft., carrying away the derrick. Development proceeded with such success that it was not long before a considerable initial production was attained at Maidun-i-Naftun. By 1915 the field was reported to be producing annually about 4,500,000 barrels. With the huge demand for oil which the war developed, the Persian fields supplied a substantial part of the British needs The oil produced at Maidun-i-Naftun is a light gravity crude, about 37 degrees Baume. It is high quality, containing a large percentage of benzine, kerosene, and lubricating oils, as well as fuel oil of high calorific value, and a percentage of paraffin wax. The main welt on the property, F 7, which has been a chief source of production for a number of years, has produced 26,000,000 barrels in the last 10 years, and there is a present daily yield of 13,000 barrels. The fact that throughout this field all the wells hitherto brought in have been flowing ones with constant pressure at the head has resulted in low producing costs. According to reports published some months ago the Persian fields are producing 65,000 barrels daily, as compared with 40,000 in 1921. The former figure would thus give an annual total of somewhere about 24,000,000 barrels, but this appears to be a conservative estimate of this field’s capacity. It has been publicly stated that while it is impossible to make a definite estimate as to this field’s staying qualities, all evidence points to an extensive life with an aggregate production much in excess of the present output.