The Chargé in Egypt (Winship) to the Secretary of State

No. 886

Sir: I have the honor to report further, in compliance to cabled instruction No. 17, of July 19, 1926, 5 p.m., that the Minister for Foreign Affairs addressed a note to the Legation on August 26, 1926, in reply to the two notes from the Legation dated June 8th and July 10th, (copies of the last mentioned notes were enclosed in Despatch No. 855, dated Alexandria, July 20, 1926). A copy of the original note from the Minister for Foreign Affairs is attached hereto as enclosure No. 1, together with a translation thereof.

Since my return to Cairo I have conferred several times with the officers of the Vacuum Oil Company and have received from them a “Memorandum on the Use of Floating Storage in Alexandria Harbour” in which they answer item by item the points raised by the Ministry for Foreign Affairs. Copy of this memorandum is transmitted as enclosure No. 2.22

In the meantime the Vacuum Oil Company has raised another point regarding irregularities in the application of petroleum regulations in Alexandria which is outlined in the second memorandum, enclosure No. 3.22

From my short acquaintance with the case it would appear that there is a discrimination against old established oil companies in Egypt, including the Vacuum Oil Company, through the granting of special privileges and immunities to small competing firms. Established concerns are held to a strict observance of the Egyptian regulations regarding petroleum which require that “vessels load and unload with all reasonable speed and leave the harbour as soon as the work is completed or subject themselves to a penalty” and expensive tanks must be maintained on land owned or purchased, etc., while several small dealers are permitted to store oil in floating barges in Alexandria harbour and fill their tank cars from these barges direct.

These privileges make it possible for the smaller concerns to undersell the established firms.

It is also pointed out that these floating barges are in such close proximity to the tanks and warehouses of the Vacuum Oil Company that they represent a menace to the safety of American property.

In view of the fact that Minister Howell is returning to Cairo within a week I shall not take the matter up with the Foreign Office and have so informed the Vacuum Oil Company.

I have [etc.]

North Winship
[Page 575]

The Egyptian Minister for Foreign Affairs (Saroit) to the American Chargé (Johnson)

No. 15.7/8 (3261)

Mr. Chargé d’affaires: By Notes No. 356 of June 8, and No. 361, of July 10, 1926, the Legation of the United States of America has seen fit to call the attention of this Ministry to a complaint formulated by the representatives of three oil companies, including the “Vacuum Oil Company”, on the subject of the authorization granted certain importers to establish floating depots in the port of Alexandria, an authorization which had already been the subject of a protest addressed to the Ministry of the Interior. The representatives of these companies disclosed that they had incurred great expense in the construction of reservoirs upon land and in taking every possible precaution to prevent accidents and that the establishment of these floating depots by importers lacking experience not only caused them an inequitable injury but constituted also a grave danger for the neighboring reservoirs as well as a menace to public security.

This protest having been submitted to the careful examination of a competent authority, I have the honor to impart to you the following information:

The general question of the control of the trade in petroleum in Egypt has recently been the object of a minute examination by a committee, especially appointed for this purpose, which has gathered together the views of the best experts whom the Government was in a position to enlist. This committee has given special attention to the question of floating depots. It has been established that the introduction of these depots in Alexandria is due to the lack of place on land itself for the establishment of new installations as well as because of the extent of the existing installations and because in awaiting the creation of a Petroleum Basin the use of floating depots cannot be prevented without imposing a grave restriction on trade and an injury to the general interests to the port of Alexandria.

In recognizing that the use of floating barges should be considered as provisional, the committee has arrived at the conviction that they do not constitute in themselves a special danger.

For these reasons the competent authorities do not believe that the establishment of floating barges injures the interests of the companies in question or threatens the security of their installations and this the more so because certain of them make use of floating barges for the supplying of their reservoirs.

On the other hand the authorities have taken all necessary measures for the control of these depots in the general interest.

Kindly accept [etc.]

A. Saroit
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  3. File translation revised.