890g.6363 T 84/48
Memorandum of Negotiations in London between
American Oil Interests and the Turkish Petroleum Company66
undated
[Extracts]
Open Door Policy
The first three or four meetings were devoted entirely to a discussion of
whether or not a formula could be arrived at to give full effect to our
State Department’s views as to the open door policy in Mesopotamia which
would be acceptable to the present partners in
[Page 341]
the T. P. Co., Limited. As a result of these
discussions a memorandum was prepared, dated July 21st, copy of which,
marked “Exhibit A”, is annexed. This document was in the main drafted by
me and discussed prior to its presentation to the partners in the T. P.
Co., Limited, with Ambassador Harvey, who rendered me most valuable
assistance by his suggestions and advice during my sojourn in London.
This document is acceptable to the present partners in the T. P. Co.,
Limited, and I venture to express the hope that it may also be found
acceptable to our State Department.
. . . . . . . . . . . . . .
It was made perfectly clear to the partners in the T. P. Co., Limited,
that the acceptance of this memorandum, or some other formula to give
effect to the open door policy, must of necessity be obtained prior to
any commitment on the part of the American group as to a participation
in the T. P. Co., Limited.
[Annex—Exhibit A]
The development of the Oil resources of Mesopotamia requires the
installation of an extensive pipeline gathering and storage system,
which can only be accomplished by enterprise of more than ordinary
dimensions, and in order to bring together all interests so as to
ensure the provision of ample capital and the most economic and
efficient administration, the Turkish Petroleum Company was
established. The participation in the Turkish Petroleum is now as
follows:
| Anglo-Persian Oil Co. Ltd. |
50% |
| Shell |
25% |
| French interest |
25% |
the capital of the Company being £160,000, fully
subscribed and paid up.
It is now suggested that American interests join the Turkish
Petroleum Company—with a participation of %—the shares being
provided by the original holders in proportion to their holding, or
by a proportionate increase of Capital.
To establish the open door policy for others desirous of developing
in Mesopotamia, it is proposed that the following general principles
be adopted:—
- (1)
- That the royalties payable to the Iraq Government under
the various concessions and rights held by the Turkish
Petroleum Company, including the Petroleum Eights in Iraq
acquired by them from the Bagdad and Anatolian Railways be
agreed with the Iraq Government at the earliest possible
date on the basis of a fixed and definite amount per ton of
oil produced and saved.
- (2)
- The Turkish Petroleum Company, Ltd., future operations in
Iraq to be, inter alia, as follows:
- a.
- Own and operate pipe line systems from the various
fields to tidewater, either as a common carrier at
published tariff rates, or else as a common buyer in
the fields of crude oil.
- b.
- Select for their own exploitation within two years
from the date of the confirmation of the concessions
by the Iraq Government a total not to exceed 12
blocks, the area of each block not to exceed 16
square miles.
- c.
- The oil rights for the balance of the territory
covered by the concessions, totalling some 150,000
square miles, to be opened for sub-lease to any
responsible individual, firm or corporation who may
be interested in developing oil production in
Iraq.
- d.
- Operate refineries to supply the internal
consumption of Iraq and such other trade as the
Company may decide.
The method of procedure in the granting of these sub-leases to be as
follows:
- (1)
- A standard form of sub-lease to be adopted and published,
and all sub-leases to be made on the basis of this standard
form. Such standard form to contain, in addition to the
usual lease clauses, definite provisions for the starting of
work or the payment of a uniform rate of rental by all
sub-lessees.
- (2)
- Each sub-lease to cover single areas of as nearly as
possible 16 square miles.
- (3)
- Prior to January 30th of each year until the entire area
has been sub-divided notice to be given by publication in
official Gazette of Iraq and in the leading oil trade papers
in Holland, France, Great Britain and the United States of
the particular district which has been sub-divided into
blocks of as nearly as possible 16 square miles each. Each
one of these blocks to be designated and individually
numbered.
- (4)
- One year after the publication of the particular district
which has been sub-divided and is, therefore, open for
leasing, a public auction shall be held in Bagdad and the
various leases sold to the buyer who is prepared to pay to
the Turkish Petroleum Co., Ltd., the highest royalty in
crude oil.
- (5)
- The Turkish Petroleum Co., Ltd., not to become a bidder
for any of these sub-leases.
