Page 376 - Arabia the Gulf and the West

The Masquerade 313

half) in the Kuwait Oil Company. Gulf Oil believed that ARAMCO’s

strategy of trying to keep exclusive control of Saudi Arabia’s oil reserves,
almost regardless of cost, was mistaken. Price was just as vital a considera­
tion as access, and guaranteed access could prove in the end to be tantamount
to a legal obligation upon the companies to buy back participation crude
at inflated and irrational prices. In Gulf Oil’s view, there should be no
mandatory buying back of government crude: instead, if agreement on its price
should prove unattainable, the government in question should be left to
market the crude itself.
ARAMCO rejected Gulf Oil’s arguments and went ahead with its offer of
higher prices in return for guaranteed access to participation crude. The other

companies had little choice but to follow suit. Between 20 December 1972 and
22 January 1973 interim participation agreements were concluded by the
companies concerned with Saudi Arabia, A.bu Dhabi, Qatar and Kuwait, all of
which were to take effect from 1 January 1973. They provided fora 51 per cent
government shareholding to be attained by 1982, rather than 1983, and they
obliged the companies to buy back any and all participation crude that the
governments might wish to sell them. Far from clearing the air, the agreements
only created fresh uncertainty. The Kuwait national assembly refused to ratify

the agreement with Gulf Oil and BP, its assorted Robespierres and Dantons
calling variously for 60 per cent participation, complete nationalization and a
jihad against the West. The Saudis, too, treated the agreement they had just
signed as a dead letter, and the neighbouring small fry down the Gulf dutifully
aped their lead. In truth, none of the Gulf governments really had its mind
upon the actual agreements, being too enthralled by the fascinating goings-on
in Libya and Persia in the early weeks of 1973.
Indulgent though the terms of the Gulf participation agreements had been,
they were looked upon with derision by Qaddafi and his fellow praetorians.
They wanted 50 per cent participation in all oil company operations in Libya,

and they wanted it immediately. They would pay compensation for this
compulsorily acquired shareholding only at the net book value, not the current
value, of the companies’ Libyan assets, and they were not prepared to give any
assurances to the companies about future access to participation crude. Once
again Qaddafi singled out the smaller, independent companies for attack
ecause they had few, if any, alternative sources of supply. Starting with
unker Hunt, he demanded that the company make over half of its producing

concession in the Sarir field. As the Libyans already controlled half the original
concession, which they had expropriated from BP in December 1971, com-
P ance with their demand would have left Bunker Hunt with only a quarter of
L b 6 comPany refused to budge, offering instead to treat with the
1 yan government on the basis of the October 1972 general agreement on
participation. Qaddafi thereupon turned his fire on the other independents,
Pre erring upon them similar demands to those made upon Bunker Hunt.