Page 168 - Historical Summaries (Persian Gulf - Vol II) 1907-1953

I*

155
76. It may be noted that the Rulers other than Umm al Qaiwain and
Fujairah have accepted responsibility for the safety of survey parties of Petroleum
Development (Trucial Coast) Ltd. in their territory and have undertaken to punish
the culprits and pay compensation if such parties are attacked.(“) A specimen
undertaking is included in the Appendices (Appendix G).

(b) Abu Dhabi
77. The Ruler of Abu Dhabi granted a concession to Petroleum Development
(Trucial Coast) Ltd. on January 11, 1939.(5C) The text of it had not previously
been agreed with His Majesty’s Government and there was some discussion about
its terms but it was finally approved in its original form in May 1940.(4T) The
Ruler was not required to take cognisance of the Political AgreementC") between His
Majesty’s Government and the Company which was based on it. The concession
covers the whole territory subject to the rule of the Ruler of Abu Dhabi and its
dependencies and all its islands and territorial waters and provides that if in the
future there should be carried out a delimitation of the territory belonging to Abu
Dhabi, by arrangement with other governments, then the area shall coincide with
the boundaries provided in such delimitation. There is a further provision giving
the company oil rights in the Ruler’s share of any Neutral Zone which may be
formed adjacent to his territory. The annual payment to be made to the Ruler
until the discovery of oil in commercial quantities is Rs. 100,000, but this sum is
liable to be increased by 25 per cent., if the company does not discover a drilling
location within four years and thereafter by a similar percentage every three years
if the company does not begin drilling or surrender its rights.
78. A well was drilled at Ras Sadr east of Abu Dhabi in 1950 but no oil was
discovered. Relations between the Ruler and the company at this time were not
very happy, partly because of the dispute over the sea-bed concession (paragraph
79 below). Strikes amongst local employees, believed to have been fomented by
the Ruler, occurred at Ras Sadr and the Royal Navy had to be called in to stabilise
the situation. In 1953 another well was drilled at Murban near Tarif west of Abu
Dhabi close to the frontier claimed by the Saudis. Oil was discovered but the
company had not yet stated by the end of the year whether it was available in
commercial quantities. From the autumn of 1951 until April 1953 the company
were restricted from operating in the area claimed by the Saudis in the western and
southern parts of Abu Dhabi territory the ownership of which was under dispute
with the Saudis (paragraph 98 below).

79. In June 1949 the Ruler issued his declaration of jurisdiction over the
sea-bed. Petroleum Development (Trucial Coast) Limited claimed that their
concession automatically gave them rights in the sea-bed thus 'annexed to Abu
Dhabi territory. The Ruler refused to accept this contention and the dispute was
referred to arbitration as provided for in the concession. The arbitration took
place in Paris in August 1951 when it was decided that the company’s concession
included the subsoil of the territorial waters (including the territorial waters of the
islands) but not the subsoil of the submarine area contiguous with Abu Dhabi
outside the territorial zone. Meanwhile the Ruler had on December 2, 1950
granted a concession for his sea-bed for 65 years to the Superior Oil Company, an
American company, on payment of Rs. 1,000,000 down with an annual payment
of the same amount and a royalty fixed at one-fifth of the “ proceeds of sales.”(5’)
The company had previously entered into a Political Agreement with His Majesty’s
Government, the principles involved in which the Ruler agreed in writing to
accept.O In May 1952 the company gave notice of termination of this concession
and of other sea-bed concessions which they held in the Persian Gulf apparently
because they decided that they could not afford further investment in the area.
80. On the relinquishment by Superior Oil Company of the concession the
Anglo-Iranian Oil Company entered the field and the Ruler granted a concession
on March 9, 1953 to their associate, the D’Arcy Exploration Company, for a period
(4S) I.O. to F.O. P.Z. 939/37 of February 16, 1937 (E 1000/12/91 of 1937).
(s#) No. 1 IV, O.A.C.
(ST) I.O. to F.O. P.Z. 2505/40 of May 9, 1940 (E 360/360/91 of 1940).
(SI) No. 2 IV, O.A.C.
(4*) P.R. to F.O. 1535/15 of March 22, 1951 (EA 1272/20 of 1951).
(•“) (EA 1273/31 of 1950.)