Page 275 - Records of Bahrain (7) (ii)_Neat

Petroleum affairs 665

so it appears that on tho question o.r tux payments
on the oil produced (Yom tho concussion tho toiler
is being brought into lino v/iUi the treatment or Uio
other oil nronucinrj status in the Persian Gulf-
There should therefore bo no nnod for him l.o open
discussions on this question in accordance with tho
Company's promise to do so if othor states received
substantially bettor tonus.
Tho concession payments on Uio refinery were
defined in No. (1) of Uio six points of amendment
listed in the supplementary agreement botwoon
the liulur of Bahrain and BAl'CO dated December B,
19bo. in this supplementary agreement tho Company
agreed to pay a fee of 2f ponco sterling per barrel
or foreign crude brought-into and refined in Bahrain.
This foe works out to approximately 1/bd per ton.
As you know in tho Persian sottlemont it was agreed
that, the separate company Conned to operate tho
Abadan refinery should doclaro a profit of L>/-d
per ton on Uio oil refined and that this profit should
bo subject to bO/o tax. Consequently the Persian
Government receives 2/Gd on every ton of throughput.
1 asked Mr. Skinner how they felt they would bo
affected by this settlement. Mr. Skinner described
at some length the hisUiry of tho growth of the
refinery at Bahrain. He said that it was decided
to uuila tho refinery on tho island mainly fox* two
reasons; (i) because of tho stability pi’omisod hy
tho presence of Her Majesty s Government, and (ii)
because of the promise that the refinery should not
be subject to taxation, Because of those favourable
conditions tho refinery had continually lieon expanded
until now its recognised capacity was 11113,000 barrels
per day « nd actually a throughput of ;:10,000 nam.-ls
had boon r..-ached. He maintained that i t was mere
economical to build refineries in the distributing
countries than at tho producing end and it was
only economical to'refine at Bahrain because of Uio
special conditions. Ho said tint those matters had
been explained to the toiler on many occasions, lie
fult that it was a mistake too slavishly to follow
tho Persian pattern and that as circumstances
varied fi*om one country to another sumo variation
in the concession arrangements was desirable. When
1 asked him whether it might not cost the Company
less to pay the refinery dues in the form of to A
which could bo set off against the taxation of the
parent companies in the United States, he maintained
that this could only be done if dividends wore

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