The Minister in Egypt (Kirk) to the Secretary of State
[Received February 3—9:32 a.m.]
232. New budget provision for 15% export duty effective February 1st is significant in connection with Petroleum Reserves Corp.29 plans [Page 68]for Alexandria refinery (see Legation’s 194 and 196 January 29 and 205, January 3030) and petroleum exploration programs of American companies in Egypt.
American companies here express grave concern over their ability to develop Egyptian wells and export petroleum at competitive prices after paying 15% mining royalties to Egyptian Government, import duties on machinery and equipment, various local taxes and the new export duty. British interests are in a more favorable position because a very large proportion of their production is marketed in Egypt and they are not dependent upon export business.
It would appear that if the proposed oil projects in Egypt and especially the refinery in Alexandria were not exempted from the burden of the new export duty they would operate at a considerable disadvantage in comparison with Middle Eastern wells and refineries outside Egypt.