Page 103 - The Persian Gulf Historical Summaries (1907-1953) Vol III

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between His Highness Sheikh Sir Ahmed al-Jabir, as-Subah, K.C.S.I., K.C.I.E.,
the Sheikh of Kuwait, in the exercise of His powers as Ruler of Kuwait on His
own behalf and in the name of and on behalf of His heirs and successors in whom
is or shall be vested for the time being the responsibility for the control and
government of the State of Kuwait (hereinafter called “The Sheikh”) and the
American Independent Oil Company, a Company incorporated in the Stale of
California, United States of America, whose principal oflicc is situated in the
City of San Francisco, State of California, its subsidiaries, successors and assigns
(hereinafter called “ the Company ”).

Article I
The Sheikh hereby grants to the Company the exclusive right to explore,
search, drill for, produce and win natural gas, asphalt, ozokerite, crude petroleum
and their products and cognate substances (hereinafter called “ petroleum ”) within
the islands of Kubr, Qaru and Umm-al Maradim, including their territorial
waters (hereinafter called “ the defined area ”), the exclusive ownership of all
petroleum produced and won by the Company within the defined area, the right
to refine, transport, sell for use within the State of Kuwait including the defined
area or for export, or otherwise deal with or dispose of any and all such petroleum
and the right to do all things necessary for the purposes of those operations.
It is understood and agreed that the boundary of territorial waters for the
purposes of this Agreement is three (3) nautical miles from low-water mark.
The Company’s operations shall be conducted with due regard to the character
of the sea surrounding or overlying the defined area, in particular the Company
undertakes that, in the exercise of its rights and fulfilment of its obligations under
this Agreement, it will interfere to the minimum extent possible, and will take
adequate precautions for the protection of navigation, fishing and pearling; and
that it will comply with all reasonable requirements of the competent authorities
affecting the navigation of ships and aircraft.
For the purpose of its operations within the defined area, the Company shall
have such rights within Kuwait as are hereinafter granted. The Company under­
takes that it will not in Kuwait carry on any operations within areas occupied by
or devoted to the purposes of mosques, sacred buildings or graveyards, or carry
on any operations except the sale of petroleum, housing of staff and employees
and administrative work within the town of Kuwait.
It is understood and agreed that this Agreement is subject to any rights
which may be established under any existing concession in accordance with the
machinery provided for in that concession.
The period of this Agreement shall be sixty (60) years from the date of
signature hereof.

Article 2
(A) Within nine (9) months from the date of signature of this Agreement
the Company shall commence geological and geophysical exploration.
(B) The Company shall drill for petroleum to the following total aggregate
depths and within the following periods of time and subject to the provisions of
Article 1 at such and so many places as the Company may decide: —
(i) 4,000 feet prior to the third (3rd) anniversary of the date of signature
of this Agreement.
(ii) 16,000 feet prior to the fifth (5th) anniversary of the date of signature
of this Agreement.
(iii) 40,000 feet prior to the tenth (10th) anniversary of the date of signature
of this Agreement.
After the discovery of petroleum in commercial quantities, the Company shall,
subject to the provisions of Article 2 (B) hereof, conduct its operations in such
a manner as to produce petroleum in the defined area within the shortest possible
space of time and in the largest possible quantity, and shall submit evidence to
the Sheikh, to His satisfaction, that its operations are being so conducted.
The Company shall conduct its operations in a workmanlike manner and by
appropriate scientific methods and shall take all reasonable measures to prevent
the ingress of water to any petroleum-bearing strata and shall duly close any
productive holes drilled by it and subsequently abandoned. The Company shall
un