Page 101 - Historical Summaries (Persian Gulf - Vol II) 1907-1953

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the Ruler that the Arabian American Oil Company had ceded the concession for
the Zone which he had granted to them and asked him to arrange with the American
Independent Oil Company to take the concession for his share of the Zone on the
same terms as that concluded for the Kuwait share. Meanwhile they were not to
start work.(340) The latter company accordingly started negotiations for the Saudi
Arabian share of the Zone but these quickly broke down and in February 1949 the
concession^") for this share was granted to the Pacilic Western Oil Corporation on
terms more favourable to Ibn Saud than those which were obtained by Ahmad from
his company.!343)
109. Shortly before the grant of this concession Ibn Saud had told the Ruler
that the American Independent Oil Company could start work on the Zone, and
they later reached an agreement with the Pacific Western Oil Corporation whereby
they assumed sole responsibility for the initial operations. They started work at
the end of 1949. Their Manager took up his residence in Kuwait and their
American operating personnel were housed in a vessel anchored off the shore of
the Zone so that no administrative problems arose. Several wells were drilled and
no oil was struck until March 1953. By October three wells were producing about
2,000 barrels a day each and the company hoped to be exporting oil by the end of
the year.(3n) They reached an agreement with the Pacific Western Oil Company
whereby they would continue to operate on behalf of both companies and they
would export the latter’s share of the oil as well as their own through one line having
an outlet to marine loading points in Kuwait territory north of the Zone’s
boundary,(34‘) though the Saudis were not expected to acquiesce in this arrangement
for long and there were rumours that they intended to move into the Zone without
warning in the same way as they did into Buraimi in 1952 (Trucial States,
paragraph 101).
110. In 1952 the Ruler agreed to grant to the company rights over the sea-bed
off the Zone, similar to the rights which had been granted to the Kuwait Oil
Company in the agreement of 1951 (paragraph 98 above), to a distance of three
miles beyond the limits of territorial waters. The company gave to Her Majesty’s
Government an undertaking!344) to do nothing to prejudice the fixing of the
boundaries of sea-bed area pertaining to the Zone and to carry out operations with
due regard to the character of the high seas outside territorial waters and in
particular to interfere to the minimum extent possible with navigation, fishing and
pearling.(34C) Her Majesty’s Government in acknowledging this communication
furnished the company with their views on the delimitation of territorial waters.(*4T)
A draft agreement with the Ruler was approved by Her Majesty’s Government(34#)
but discussions of its terms with the Ruler’s representative ensued and eventually
Her Majesty’s Government asked that its execution should be held up pending the
issue of a joint declaration of rights over the sea-bed of the Zone by Kuwait and
Saudi Arabia (paragraphs 84-85 above). In these circumstances the agreement had
not been signed by the end of 1953. In the meanwhile the Legal Advisers of the
Foreign Office called attention to the fact that a phrase in the draft agreement, and
also in the original concession agreement of July 1948, might be interpreted as
limiting the Ruler’s right to reach a further agreement with the King of Saudi
Arabia regarding their respective rights in the Neutral Zone as contemplated in the
Kuwait-Najd Boundary Convention of 1922(349) (paragraph 37 above). The
company were asked for an assurance that no such interpretation would be put
on the phrase but refused to give it.(340) It was accordingly proposed at the end of
1953 to bring the position to the Ruler’s notice.
(c) The Islands of Kubbar, Qaru and Vnim al Ma radin
111. In November 1948 the American Independent Oil Company, not having
been permitted by Ibn Saud to work in the Neutral Zone and their negotiations for
(»«•) Tel. from P.R. to F.O. 172 of September 14. 1948 (E 12056/72/91 of 1948).
(”>) No. 7 II. O.A.C.
(=4’) (E 3497/1534/91 of 1949.)
(=4J) Jedda to F.O. 1085/21/53 of October 4. 1953 (EA 1083/62 of 1953).
(344) Kuwait to F.O. 214/59/53 of November 8. 1953 (EA 1083/64 of 1953).
C43) No. 6 (a) II. O.A.C.
(=4*) F.O. to P.R. EA 1534/4 of February 24. 1953.
(?4T) No. 6 (b) II. O.A.C.
(!4‘) F.O. to P.R. EA 1534/2 of January 31. 1953.
(?4*) No. 8 II. T.C.
(?i0) Aminoil to F.O. U.n. of September 8, 1953 (EA 1534/20 of 1953).