ALI BABA’S OIL

Taranaki Daily News, 23 December 1932, Page 13

ALI BABA’S OIL

MODERN VERSION. AN AUSTRALIAN ALEXANDER. It would appear from Saturday’s cabled news that an element in the Persian Government’s case in the AngloPersian oil concession cancellation, is the alleged corruptness of the former Persian regime that granted the concession. If every contract entered into by a Government can be validated only by a later Government’s good opinion of the first Government’s character, what Government contract is safe? The story has already been told of how the d’Arcy concession was secured by d’Arcy, a Queenslander who had made money in Australian gold mining. How easily a gold mining million can fall short of the millions required to develop an oilfield is indicated by the references to the Anglo-Persians undertaking in Sir Percy Sykes’ “History of Persia,” published in 1930. Sir Percy Sykes states that 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, paidup 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, Mazanderau, Astra-.

bad, and Khorasan, during a period of sixty years from 1901. After a certain amount of geological examination, drilling was started at a point near Kasr-i-Shirin, 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 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. D’Arcy thereupon enlisted the interests of the Buram 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 Maydan-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 had also 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 not 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 Selbourna 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 Mohamera. On the 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 was 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 worl4-wjde character. The British Gov-

ernment’s. investment in the company new stands at £5,000,000, but the market value of its holding is believed to be many times the amount of the sum actually invested. z