The Secretary of State to the Ambassador in Japan ( Warren )

No. 27

Sir: Reference is made to the Embassy’s confidential despatch No. 52 of November 17, 1921,26 relating to the reported operations of a Japanese group in connection with petroleum prospecting in Russian Saghalien.

For the confidential information of the Embassy the following brief summary of data in the possession of the Department is transmitted. These data were received from a representative of the Sinclair Consolidated Oil Corporation of New York, which contemplates obtaining a concession in Russian Saghalien.

The Sinclair Consolidated Oil Corporation has informed the Department that the company had acquired a contract with the authorities of the Far Eastern Republic at Chita covering the development of the oil fields in northern Saghalien. The contract is stated to call for a preliminary survey of northern Saghalien, the right to extract and market the oil, and the division of the profits between the company and the Far Eastern Republic.

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The contract in question was stated orally to be a preliminary agreement which had been properly signed, but which, under a condition fixed by the Company, must be ratified by the Parliament at Chita. The agreement is understood to contain clauses to the following effect:

(1) The Far Eastern Republic may decline to grant the concession at the end of five years if by that time official relations between the United States and the Far Eastern Republic are not established; (2) in that case, the Far Eastern Republic agrees to reserve for the company the lands indicated by the company for one or two years more, the company agreeing to pay 100 gold dollars for each square verst per year. The agreement also contains provision by which the company is given an extension of time in case prospecting work is prevented by the military occupants of the territory. It is said that the Japanese are not specifically mentioned in the agreement.

Claims to petroleum rights initiated in Russian Saghalien prior to January 1, 1915, include the following:

The Urkt or Zotoff concession covering 1740 acres.
18 Otvods (or lease areas of 27 acres each) held at one time by the China Oil Company. Thirteen of these are stated to have been definitely and officially canceled by the Russian Government prior to 1915.
238 Zyafkes (or prospecting areas of approximately 106 acres each), of which 16 were recorded in the name of the Sakhalin Oil Trading and Coal Company, 49 in that of Delsalle and Biskoupsky, and the remainder in the name of 120 other persons. All of these zyafkes are stated to have lapsed prior to May 5, 1915.

All of the above claims are on the eastern coast of Saghalien.

Of the above claims the only one which is said to be clearly valid, as of January 1, 1915, is the Zotoff concession. It is stated to have reverted to the Government, for some reason, and was disposed of at public auction in July, 1914, to L. L. Artz of Vladivostok. It is not known whether Artz is still the owner of this claim.

It is further stated that the original claims were so located that 80 per cent of them were on lands of no possible oil value. Furthermore, if they were all valid and all located on prospective oil territory, they would cover only an insignificant fraction of such territory.

The Department has been informed that two British companies, the Second Sakhalin Syndicate, Ltd. and the Sakhalin Oilfields, Ltd., which state that they hold a number of the above-mentioned claims, have been promised the support of the British Foreign Office. It will be understood that the Embassy, beyond obtaining and transmitting [Page 801] all available information, should take no action until it receives further instructions from the Department.

I am [etc.]

For the Secretary of State:
F. M. Dearing
  1. Not printed.