Page 245 - Records of Bahrain (7) (ii)_Neat

Petroleum affairs 635

r'-t'js -jrs $ v* R. rLevA'^f'
1 ■i rUA^t. .
UaAs •t
Tho Bahrain Petroleum Company decided in May 1951 to
offer incroaood payments t.o tho Hiller of Bahrain in view of
the increasing revenues of neighbouring countries from oil
and their discovery that local renerveo would only’loot
twenty years at a production rate of 30,000 barrels a day.
2. It was tho Company's intention that the Rulor should
receive an amount per ton on locally produced oil comparable
to that received by neighbouring Rulers, They intended to
reserve against tho day when BahruJn production tapered off
uny proposal for n tax on oil imported into Bahrain for
processing. V/hen tho Company^:* representative called on
the Rulor early this year, a proposal wan put forward that
payment to tho Ruler should bo made partly as royalty and
partly by the tax route, the Company's offer working out
at a total of a little over Rn.20 per ton. The Rulor
countered by asking for a minimum rate of Ra.30 per ton
and 2 annas per barrel on imported oil. Tho Ruler was
subsequently induced to reduce bis bid to Rs.22 annao 12
per ton plus 1 anna per barrel on imported crudo.
3. Bince the Company's initial intervicw with tho Rulor
the Resident liar, secured the Ruler's agreement to accept
payment in'sterling for all his oil revenues, The Company
for their part have discussed with us the line which they
should take in further negotiations with the Ruler, They
proposed an offer on tho basis of a 50:50 split for Bahrain
crude, giving n tol.nl payment of Rs.20£- per ton, made up*
of Rn.10 per ton royalty and Rs. 10-J per tl.on Income Tax.
There would in addition be n payment of 3 anna por barrol
on crude imported for processing, It was agreed at a
meeting of the Company on the 28th February that they
should stand firm on their payments for Bahrain production
and that if any concessions proved necessary these should
he mudo on the amount of tax payable on imported crude.
Tho Company wore also given the usual warning that payment
by the tax route wuiild not necessarily entail any remission
of United Kingdom tax liability, This warning is not, of
course, of direr.I. concern to Rupee, whose parent company Is
UiO.1 Hi-fri. f\ *** (Ullty) ft } f Vvi-i
4. Tho latest informal, i on Prom Bahrain i s that the Ruler's
Lntcrcst in increased revenue .is not centred on the uinount
he receives per ton so msidi as. *oi tin: receipt of a gross
income comparable to that of his "neighbours", which wo
interpret as meaning the Ruler of Qatar, The Bnpco offer
calculated on an impost oJ* 7 million tons per annum of crude
would in fact approximate the Ruler* s. revenue to that at
present received by Qatar, Since the Qatar concession is
shortly itself to bo placed on a Ji0:*50 basis, tho Company
will avoid tho use of this argument.
5. As the representatives of Onltcx, including Mr. Ernst,
so recently discussed their negotiations in Bahrain with
members of the Foreign Office and no now problems hnvo
arisen in the meantime, tho object of Mr. Ernst's call on
Oir Roger Mold ns, said to bo for "a general talk" in no
doubt to hear the latent news from tho Persian Gulf.

(R.F.G. 3are11)
10th March, 1952.
A f &