OIL DISPUTE.

Manawatu Standard, Volume LIII, Issue 15, 15 December 1932, Page 7

OIL DISPUTE.

REPLY FROM PERSIA. LONDON, Dec. 14. The Teheran Government, replying to the last British Note in reference to the Anglo-Persian Oil Coy., says it considers The Hague Court not competent to examine the oil dispute and reiterates that the cancellation of the D’Arcy Concessions was justified. It ,threatens to bring to the notice of the League of Nations alleged threats of pressure by the British Government, “which are encouraging the oil company to resist payment of royalties and income tax.”

A new agreement is suggested safeguarding Persian interests.

BALANCING PRODUCTION WITH DEMAND.

PARIS, Dec. 14,

British, Dutch, American and Roumanian oil interests hnvo reached an agreement on measures necessary tobalance the production of oil with the demand. Roumania has agreed to limit production to 18,500 tons daily for three months from January 1.

REFERENCE TO THE LEAGUE. Received Decemljer 15, 10.15 a.m. GENEVA, Dec. 14. The Persian Government has instructed its Minister to refer the oil dispute to the League. D’ARCY CONCESSION. ROMANTIC STORY. In his “History of Persia,” published in 1930, Sir Percy Sykes thus tells the story of the first British oil concession in Persia—the cancellation of which by the Persian Government is now the subject of protests by Britain—and the rise of the Persian Oil Company. In 1901 the Persian Government granted to Mr D’Arcy, an Australian, a concession, by the terms of which the Persian Government received £20,000 in cash, paid-up shares of similar value, and 16 per cent, of the annual net profits. The concession gave the exclusive right to bore for and to work oil throughout Persia, except in the provinces of Azerbaijan, Gilan, Mazanderan, Astrabad, and Kliorasan, during a period of sixty years from 1901. After a certain amount of geological examination, drilling was started at a point neqr Kasr-i-Sliirin, on the Turkish frontier. Apart from the necessity of paying Turkish Customs, the choice of locality could hardly have been worse from a geographical or business point of view, since it involved a great expense in the transport of the heavy boring plant, and also the difficulty and prohibitive cost of running a pipe line for some 300 miles to the Persian Gulf, across a hilly country inhabited by tribes of a most predatory 'type. Oil was at length struck in large quantities, and only then, apparently, did it dawn upon the. advisers of the concessionnaire that some £300,000 of good English money had been wasted owing to lack of knowledge of the local conditions.

Mr D’Arcy thereupon enlisted the interests of the Burma Oil Company, and a new syndicate was formed, which began prospecting in the Bakhtiari country, where the presence of an oil spring had been reported at least twenty years earlier, and test boring was eventually started on the site of the present May-dan-i-Naftun or “Plain of Naphtha.” For a long time there was no success, and orders were on the point of being issued to close down the work, when a “gusher” of oil was struck and saved the situation. Much credit is due to the early pioneers, who not only suffered from a very trying climate without proper houses or food, but also had to endure patiently the truculent insolence of the tribesmen. The Bakhtiaris put many difficulties in the way of pioneer operations, and notwithstanding that they were receiving a handsome subsidy to provide protection for the Europeans, treated all complaints with indifference. The manager was repeatedly threatened by his Bakhtiari guard; and no.t until a small escort of Indian troops appeared on the scene, and the Bakhtiari chiefs were subsidised by further payments in cash and shares, was there any security for the British community. There was at one time a great risk of the enterprise falling into foreign hands, but Lord Selborne and Mr E. G. Pretyman, realising its Imperial importance, were largely instrumental in keeping it in British hands. Later, in 1909, the Anglo-Persian Oil Company was formed, and Lord Strathcona became the first chairman. It was constituted originally with a capital of £2,000,000. Developments rapidly followed. A pipe-line was laid running from the wells to Wais on the Karun River, and thence through Ahwaz to the island of Abadan, situated on the Shatt-al-Arab, a few miles below Moliamera. On this island a refinery was established, capable of dealing with large quantities of the crude oil. A new chapter in the history of the enterprise was opened when the Admiralty wefe induced to consider the question of providing some of the further capital required for the full development of the undertaking, with the view of securing supplies of liquid fuel for the British Navy. A commission was sent out to investigate and report on the question, and made a most favourable report, with the result that, in 1914, the British Government agreed to invest £2,000,000 in the company. Since the declaration of peace there have' been further considerable developments. The authorised capital of the Anglo-Persian Oil Company has been increased to £20,000,000, and its operations in the production, refining, transport and sale of oil have assumed a world-wide character. The British Government’s investment in the company now stands at £5,000,000, but the market value of their holding is believed to be many times the amount of the sum actually invested.