890g.6363 T 84/239: Telegram
The Ambassador in Great Britain (Houghton) to the Secretary of State
[Received 4:34 p.m.]
17. In Department’s telegram No. 5 dated January 14, it is stated that the Department cannot see on what basis Gulbenkian can now claim rights additional to those of other shareholders. It was not my understanding that Gulbenkian claims any such rights.
(1) Leaving aside all previous negotiations the essential facts appear to be as follows:
Under the Iraq Convention of 19259 the Turkish Petroleum Company obtained ownership in a certain 24 parcels of land. It was agreed that the balance of the territory involved should be sold by the Iraq Government to the highest bidder at the rate of one lot of 24 parcels each year. The proceeds from these sales were not to be retained by the Iraq Government which acts only as agent, but were to be delivered to the Turkish Petroleum Company as the virtual owner. It appears from this that Gulbenkian as a shareholder in the Turkish Petroleum Company has a right to his 5 percent share from the proceeds of all such sales.
[Page 367]2. This raises a practical problem. According to Gulbenkian the only possible purchasers are the four groups which are interested in the Turkish Petroleum Company. In the four groups is included the American Group. He is of the opinion that unless he is protected the four groups will enter into an agreement to sell to each other these yearly parcels of presumably oil-bearing territory at a nominal price. He maintains that in this way his share in the actual value of the territory to be disposed of would be reduced practically to nothing.
3. Gulbenkian has therefore taken the following position: If a method by which a fair and competitive sale can be devised, he will accept it. Because of the relations between the four groups no such effective guarantee has yet been discovered or proposed. In case no such guarantee should be forthcoming he will accept in place of his share of 5 percent of the purchase money a stipulated royalty on all oil produced within these given areas. Should no oil be found Gulbenkian will receive nothing. Should large quantities be obtained he will receive much.
4. The American Group, of course, is at liberty to enter the Turkish Petroleum Company on such terms as it sees fit or to stay out. The American Group in basing its decision on the premise that Gulbenkian ought to be eliminated from sharing in the returns from all territory except the original 24 parcels, is yet within its rights. When, however, it requests the Department to support it in this position which it has assumed not as a question of right but as one of bargaining, then in my opinion it is either requesting the Department to bring pressure on the Foreign Office to secure the elimination of Gulbenkian without adequate compensation or it is giving Gulbenkian an excuse for not participating equally with the other groups.
- Turkish Petroleum Company, Limited, Convention with the Government of ’Iraq, etc.↩