Page 364 - The Arabian Gulf States_Neat

300 run legal status of THE ARABIAN GULF STATES
median line, suggests that the solution might, perhaps, lie in economic
agreements and not in international law.1"
It remains to be seen whether the above suggestions made by some
experts in the field could in any way be useful in reaching an equitable
solution to the problem of capture in the Arabian Gulf, "it seems clear
now that the tendency among some authorities is to consider the
problem as forming a ground for departure from the application of
the principle of equidistance.

2. Boundary disputes in the Middle and Lower Gulf
(a) Definition of offshore areas oxer which concession rights arc granted
(i) Bahrain concessionary areas: According to supplemental concession
contracts signed in 1940 and 1942, the Ruler of Bahrain extended the
‘exclusive area' of the concession granted in 1934 to Bahrain Petroleum
Company (Bapco) to ‘all present and future land and marine terri­
tories under the sovereignty of the Shaikh’.2 As a result, Bapeo's
concession was extended to the submarine areas claimed to belong to
the Shaikh of Bahrain by the Proclamation of 5 June 1949.3 However,
at present, Bapeo's offshore concession area does not include (n)
the Abu Sa'fah field which is now being exploited by Aramco under
the joint-sharing of profits arrangement of 1958,4 between Bahrain
and Saudi Arabia; and (b) the offshore concession area, covering
25C0 sq. kilometres, which was granted on 20 September 1965 to a
subsidiary of the Continental Oil Company. This latter concession
area, which was relinquished by Bapco lately, lies northeast of the
Island between Aramco’s Abu Sa'fah field and the adjoining Qatar
ofTshore acreage held by Continental Oil Company (Qatar). The acreage
of Continental Oil Company (Bahrain) includes ‘the Fasht-al-Jarim
area north of Bahrain and the Huwar islands and their surrounding
waters southeast of Bahrain'.5
1 Auguste, op. cit., p. 95.
2 Sec Ely, Northeutt, Summary of Mining and Petroleum Laws of the World
(1961), Chapter 6 on Arabian Peninsula Countries.
3 See Appendix IX.
4 Sec below, p. 306. Oil in commercial quantities was discovered in Abu Sa'fah
in 1965, and production at a rated capacity of 30,000 b/d was started by Aramco
from December 1965. The Abu Sa'fah field has a complex legal and tax status;
it lies on the Saudi Arabian side of the agreed ofTshore boundary with Bahrain.
But for tax purposes, the field is treated as lying within ‘a neutral zone, wherein
50 per cent of the net profit from production will be evenly split between Bahrain
and Saudi Arabia. Aramco gets the other 50 per cent.1 Sec The Oil and Gas Journal,
27 September and 4 October 1965, p. 99. See also Map 4.
5 The 1965 Continental Oil Concession of Bahrain has been regarded as a
modern agreement. It has been awarded for a forty-five-year period, and it provides,
inter alia, for 50-50 profit sharing on a posted price basis, with provisions tor
expensing of royalties along the lines of the OPEC formula. The Company has
already started seismic survey. Sec The Oil and Gas Journal, 27 September 1965,