OIL FOR BRITISH NAVY

Otago Daily Times, Issue 16120, 8 July 1914, Page 5

OIL FOR BRITISH NAVY

GOVERNMENT'S ANGLO-PERSIAN CONTRACT , . THE STATE AS SHAREHOLDER. (Fbom Oua Own Cobkehpondbnt.) ■ LONDON, May 29. Tho long-continued negotiations between tho British Government and the AngloPoieian Oil Company have resulted in an arrangement wlhoroby tho Government will beconio tho proprietor of wliat ,will be practically a controlling interest in the extoneive. oil properties in tho neighbourhood of tho Porsiau G-ulf which tho company owne. The official statement has been issued by tho company :— "' In connection with the contract which is being arranged between hie Majesty's Government and the Angio-Poreian Oil Com-pan-v for tho siiipply of a large quantity of fuel oil for delivery over a te-nn of years, an agreement has been concluded whereby the Government is to subscribe for 2,000,000 ordinary shares and £200,000 of debentures ;i*? soon as the reeessaiy parliamentary sanction has been obtained. This additional capital ie required for the considerable extensions to the company's existing- pipe-lines, refineries, tankers, etc., which will be necessary to enable the company to carry out tho above la,nge contract." This subscription on the part of the Government will bring the aggregate capital of tho company up to £4,799,000, in which the Government will hold a majority of 2000 share votes. The Anelo-Persian Oil Company's refinery is situated at Abadam, and the fields are connected by a " pipe-line," and tho oil is pumped into tho refinery, and is them refined into petroleum products. The result of the action of the. Government will be that the Admiralty will largely have the control of a supply of oil fuel in Eastern waters. An Australian millionaire, Mr W. K. d'Arcy, is one of the directors, and Mr C. Greenway is the managing director, while others include: Sir G E. Finlay, Sir H. H. Barnes, Mr C. Wallace, Mr W. Garson, Mr J. Hamilton, and Mr J. T. Cargill. The Earl of Lichfield is a trustee for the stockholders. Although it is unusual for the Government to take shares in a company, a precedent was furnished by the Suez Canal Company. There is no disposition to criticise iho action of the Government. In fact, The Times says: " Tho announcement will give general satisfaction, as under the scheme now about to be carried out the Admiralty will not only secure undisputed access to all tho oil it is likely to need in the wide region for which the Persian Gulf is a convenient source of supply, but will be in a favourable position for negotiating with other oil proprietors should it bo necessary to do so." CAPITAL IN INSTALMENTS. A Blue Book gives full particulars of the agreement. It provides for the appointment of two ex officio directors of tho Treasury, and these directors are to have a power ol veto over all acts of the board and committees of the company and its subsidiaries, but tho Government his given an assurance to the company that this veto will be used only in matters of general policy, and with due regard to the financial and commercial , interests of the company. The capital furnished by the Government will bo issued in instalments as required, and is intended to provide for such development of resources and extension of facilities as may. bo necessary to secure an abundant supply of oil for* naval purposes over a term of upwards of 20 years. The report of Admiral Slade's Commission indicates that, with judicious working and control, tho company's concession may be expected to produce abundant supplies of oil over a long period of years.* That concession is a very large one, with good indications of oil in many places other than those at present being worked, and existing wells have proved productive and of good durability. •

IN TIME OF WAR. Tho grounds on which the Government arrived at its decision to enter into the agreement with tho company arc purely naval—viz., the imperative need of direct control of a reasonable proportion of the supply of oil fuel required for naval purposes. The policy of the A.'droiralty with regard to the provision of oil is to spread its contracts as much as possible over widely sepamted fields. Thus, in time of war, if some areas should l bo closed others will remain open. But while it is not desirable to draw all our supplies from one source, it is essential that the fields over which the Government will have control shall be so developed that in time, of emergency they will be able to supply at short notice any deficiencies that may arise through failure of deliveries elsewhere.

By taking over sueh control the Admiralty -is only extending the policy which has been adopted with regard to other articlea of prime necessity to tho State in ■ time of war —e.g., ships and munitions of war, —and it is only by assuming such control that the State can effectively .ensure that supplies shall always be forthcoming in times of emergency, and that the prices in such cases shall not be artificially inflated.

It ia important and essential in naval interests to secure that at least one large British oil company 3hall b& maintained having independent control of considerable supplies of natural petroleum and bound to the Government by financial and contractual obligations. MR HENRY'S VIEW. Mr J. I). Henry, the well-known oil authority, thinks there are several grounds on which the deal may be opposed. Speakrng to a Globe representative, he said: — "If the Government goes through with it, and makes this investment in Persian oil, we will soon have criticism in those colonies which are developing their own oil sources for the benefit of the navy. This will certainly happen in Trinidad, Newfoundland, and .New Zealand, which last-mentioned colony, it should not be forgotten, hae contributed a battleship to tho Empire's defences. In each of these islands local companies, with local directorates, have put a great deal of money into their oil-field undertakings; while in the case of New Zealand they have gone a step further and erected a modern refinery in the producing oil field at Moturoa, New Plymouth. In Trinidad, New Zealand, Newfoundland, and other parts of the Empire, the work of discovery and development has been going on for many years, arnd if great results have, not been secured it is because they have never had tho advantage of large financial resources like the Burmah Oil Company. There are, however, some eight oil companies, representing roughly 7030 shareholders, in New Zealand. The oil men of the colonies, having , applied in vain for Government assistance, will not be likelv to appreciate this- investment of national money in a country where, we only have suzerainty privileges." Mr Henry added: "Why start in Persia? And, if in Persia, why not also in some of the colonies in which proved oil territories have been even more successfully developed than those of Persia? If this question is not satisfactorily answered I do not hesitate to say that there will be more than one growl of dissatisfaction in the colonies."