MIDDLE EASTERN OIL

Korero (AEWS), Volume 2, Issue 8, 24 April 1944, Page 14

MIDDLE EASTERN OIL

A KORERO Report

After the last war an English statesman said that the Allies had floated to victory on a sea

of. oil. In this war oil is even more important than it was in the last, partly because armies are much more highly mechanized and partly because military aviation was only in its infancy in 1914-18.

When this war began all the world’s great oilfields, with the exception of the Ploesti fields in Rumania, were either owned by the United Nations or were accessible to them. Here are the world production figures (in metric tons) of crude oil and natural gasoline for the last pre-war year : — United States. .. 170,432,000 Russia .. 30,112,000 Venezuela .. 28,107,000 Iran . . . . 10358000 Netherlands Indies 7,394,000 Rumania .. 6,871,000 Mexico .. 5,523,000 Iraq . . . . 4,368,000 Colombia .. 3,118,000 Trinidad .. 2,583,000 Argentina .. 2,425, Peru .. .. 2,222,000 India and Burma 1,458,000 Bahrein .. 1,135,000 British Borneo 914,000 ' Canada .. 898,000 German Reich 609,000 Poland . . 550,000 Japan.. . . 350,000 Ecuador . . 296,000 Egypt . . 226,000 Albania . . 95,000 France .. 72,000 Saudi Arabia . . 67,000 Hungary . . 44,000 Other countries 49,000 280,276,000 The need for oil has powerfully influenced the strategy of the Axis and

Japan. The main objective of the Axis attack on North Africa and of German machinations in Iraq and Iran was not the Suez Canal, important as this waterway is, but the oilfields of the Middle East. Japan’s southward drive was in a large measure a drive for oil ; and it can be assumed that she will fight with the utmost determination to retain the oilfields of Sumatra and Borneo. Hitler’s disastrous persistence with his attack on Stalingrad can be attributed to the fact that, had Stalingrad fallen, the oilfields of the Caucasus would have been within his grasp. The United States, as the table printed above shows, produces more than five times as much oil as any other country. What this means to the United Nations is indicated by figures given recently by the United States Petroleum Administration for War, which show that 95 per cent, of all the aviation petrol used by United Nations aeroplanes comes from the United States. Nevertheless, the oil situation of the United States is not quite as satisfactory as these figures seem to show. Particularly in war, ownership or control of oil resources is only one factor. The other factor is ability to transport the oil to the places where it is needed. At the end of the last war Germany still had substantial oil stocks ; her war machine ran short of oil because her oil transport system broke down. In this war the Axis armies’ in North Africa ran short of oil for the same reason. For the United Nations, also, oil transport is a formidable problem. It is estimated that 65 per cent, of all the war shipping of the United States is employed in transporting American oil to the theatres of war. This difficulty of transport has immensely increased the importance of the oilfields of the Middle East—of Iran, Iraq, Saudi Arabia, and the little island of Bahrein in the Persian Gulf. These fields are handy to both the European and the Pacific theatres of war. The pipe-line, which has its termi-

nal at Haifa, makes the oil of Iraq available in the Mediterranean ; the oil of Bahrein and Iran supplies United Nations armies and air forces in India, while the Persian Gulf has long been of vital importance to British naval power in the Indian Ocean.

Another thing that worries Americans about their oil situation is that, according to experts, their resources cannot last many more years at the present rate of exploitation. Nor is it likely that new resources will be discovered in their territory. According to the Petroleum Administration for War, one well has been drilled for every three square miles of land in the United States.

Prudently, therefore, the United States Government and some of the great American Oil companies have begun to look overseas for additional sources of oil-supply. It is the Middle East which interests them most, for, although the present output of this region is a small part of world output, it is believed that there are in the Middle East the largest remaining undeveloped oil resources. These are the reasons which led to Mr Harold Ickes, a member of the United States Administration, to say recently : — The capital of the oil empire is on the move to the Middle East. The Americans are relatively late starters in the development of Middle Eastern oil. Persian oil-production is a monopoly of the Anglo-Iranian Oil Co., in which the British Government is a majority shareholder. Iraq's oilfields, which connect by pipe-line with Haifa and Tripoli on the Mediterranean, are worked by British, French, Dutch, and American interests. American enterprise has concentrated chiefly on Saudi Arabia and the little island of Bahrein, where, until recently, it was not believed that there were any extensive resources of oil. The company chiefly involved is California Arabian Standard, owned jointly by Standard Oil of California and the Texas Corporation. The area over which it has concessions is 60 per cent, larger than California ; and, according to the Petroleum Administration for War the oil resources of this area are “among the richest in the world.”

Much interest has been aroused by the announcement last February that the United States Government, in conjunction with the oil companies interested, is going to erect a 1,200-mile pipe-line linking California Arabian Standard’s refineries on the Persian Gulf with the Mediterranean. The reason given for this step is an interesting one. The official statement says that the pipe-line “ will greatly help to assure an adequate supply of petroleum for the military and naval needs of the United States in view of the obligations which this country must assume for the maintenance of collective security in the post-war world.”

It has not escaped the notice of the leaders of the United Nations that the post-war oil situation in the Middle East and elsewhere has dangerous possibilities Mr. Harold Ickes has summarized the outlook in a striking sentence : — Tell me the sort of agreement the United Nations will reach with respect to the world’s petroleum resources when the war is over, and I will undertake to analyse the durability of the peace that is to come. Saudi Arabia, where the main American concessions are located, is about four times the area of New Zealand and has a population of 4,500,000. It is an independent Arab kingdom, ruled by one of the ablest and most picturesque figures in the Islamic world —Ibn Saud. In the last war Ibn Saud was pro-British and helped to drive the Turks out of eastern Arabia. After the war he steadily extended his power, and in 1924 he overthrew Hussein, King of Hedjaz, whose territories he incorporated with his own in 1932 under the new name of Saudi Arabia. Ibn Saud is immensely ambitious, and 'is suspected to be working for a union of Arab States with himself as Caliph. Friendship with Britain has been a basic principle of his policy, though events in Palestine have at times strained this friendship.

On the next two pages is a map showing the principal oil areas of the Middle East and also the pipe-lines and refineries.