890F.6363/56: Telegram

The Minister Resident in Saudi Arabia ( Moose ) to the Secretary of State

72. Department’s 36, July 23, 10 p.m. Casoc suspended exploration by field parties in summer 1941 and by structure drilling August 1942. Company now preparing to send field party to explore extreme north part of concession lying along Trans Jordan and Iraq frontiers.

Drilling is going on at wildcat well at Jauf a locality 150 kilometers north of Abu Hadriyah and probably not marked on any map. Abqaiq well No. 4 is now being rigged up. No further drilling in progress.

Current daily production varies from 6000 barrels to 20,000 and perhaps averages 12,500. This could be considerably increased. An [Page 935] estimate not intended for quotation is that Dammam Dome could produce 40,000 barrels daily without injury to field and 100,000 barrels daily in ruinous production. By installing pipelines to Abqaiq and Abu Hadriyah and supplemental equipment possibly 100,000 barrels daily could be produced without injuring deposits.

All present production is barged to Bahrein for refining and thence mixed with Bahrein oil is distributed through Caltex to markets in India, Egypt, Australia, South and West Africa, Madagascar, Ceylon, Portuguese East Africa and perhaps elsewhere. Transportation is effected through Caltex owned and chartered tankers and outside tankers. Details of distribution not known here but could be secured from Caltex, New York.

To date petroleum products have been supplied in Saudi Arabia only to the Government. Deliveries in 1942 were: gasoline 3,022,006 United States gallons; kerosene 114,043 United States gallons; diesel oil 336,392 United States gallons; lubricating oil 78, 142 United States gallons. Company plans soon to supply province of Alhasa with kerosene selling through local merchants. No estimate available of quantities to be distributed but thought to be small.

Recent developments in relations between Government and Company include extension of concession for 2 years because of recognition that war conditions have retarded development of concession through no fault of Company. Also Company has recently signified intention of participating in Al Kharj reclamation project to a much greater extent than it had ever taken in a Government enterprise. Company officials recognize that this is only first step in policy where Company will assist in many activities in no way related to oil (see despatch No. 2, July 22, 194333). Company currently has difficulty in finding riyals to meet payrolls but so does the Government. Company’s Jidda representative departing for United States today advises that no issues with Government are pending.

The Department’s inquiry has not been divulged to Company officials.

  1. Not printed.