Oil Concessions in Five Arab States 1911–1953: Kuwait, Bahrain, Qatar, Trucial States and Oman

  (13) 978-1-85207-210-0   Extent:  12 volumes, 7,000 pages
Author: N/A   Published: 1989
Paper: Printed on acid free paper
Binding: Library bindings with gilt finish
See sample pages: not available

These 12 volumes provide the documentary record of the negotiations between the Arab Gulf Rulers, the oil companies and the British Government as a collection of facsimile original documents from the Persian Gulf Residency and the Political and Secret files, British Government of India.  They include the texts of the first land-based oil concession agreements for the Gulf States of Kuwait, Bahrain, Qatar, Trucial States and Oman. They contain detailed and fascinating evidence of the secret processes of negotiation, the rivalries, the commercial and diplomatic considerations, the leading personalities, and the economic and political transformation of the Gulf States.


Today the modern economies and socio-political structures of the Arab Gulf states are so dominated by oil that it is difficult to conceive that it was only just over half a century ago that their Rulers, the British Government and the major oil companies were negotiating the exploration concessions for the then nascent political entities lying on the Gulf´s western shores. Today Kuwait, Bahrain, Qatar, the United Arab Emirates and the Sultanate of Oman (the five states focussed upon in this publication) are closely integrated politically and economically (along with Saudi Arabia) through their membership of the Gulf Co-operation Council.
In the pre-oil days of the early twentieth century these coastal city-states shared many characteristics, but most significantly a collective position of weakness. Of the five only Muscat and Oman did not fall directly under British sovereignty or protection, though Britain continued by custom to exercise a considerable degree of influence over the external affairs of the Sultanate. Of the five only Kuwait possessed defined land boundaries with Saudi Arabia though the settlement responsible for these territorial limits - the Uqair Conference of late 1922 - had also resulted in that curious feature on the territorial landscape - the Neutral Zone - a feature which was greatly to complicate the issue of oil concessions in the decades ahead. Before oil the income of each Ruler derived principally from the economic activities of his subjects - he was totally dependent on the sparse revenues provided by pearling, trading or fishing. This relationship between Ruler and ´ruled´ was to change with the onset of oil wealth for the generation of the Ruler´s income was no longer dependent on the economic activity of the local population.
The framework for the initial agreements
Between 1913 and 1923 the Rulers of the various shaikhdoms and states under review in this publication signed undertakings not to grant oil concessions except to companies appointed by the British Government: the Ruler of Kuwait´s signature was obtained in 1913; the Ruler of Bahrain´s in 1914; the Ruler of Qatar´s in 1916; the Rulers of the Trucial Coast states´ in 1922 and the Sultan of Muscat and Oman´s in 1923.
Major Frank Holmes and the Eastern and General Syndicate
In May 1923 Ibn Saud granted the first oil concession (Hasa) in the Gulf area to the little-known Eastern and General Syndicate who had been in direct competition for the award with the British oil giant, the Anglo-Persian Oil Company. Registered in Britain in 1920, the Eastern and General Syndicate were represented in eastern Arabia by Major Frank Holmes, a controversial character who was constantly to worry the suspicious India Office authorities over the next decade until his appointment in late 1935 as Trucial Coast representative of Petroleum Concessions Limited. Eastern and General Syndicate also fleetingly held a concession for Bahrain though this, like the Hasa concession, was never effectively worked by the company itself. Rightly or wrongly, the British authorities regarded Holmes and his company to be interested solely in obtaining concessions and trafficking them to other parties. Having approached the Anglo-Persian Oil Company without success on a number of occasions the Eastern and General Syndicate transferred its interests in Bahrain, Hasa, Kuwait and the Kuwait– Nejd Neutral Zone to the Gulf Oil Corporation of the United States in the late 1920s. After the Red Line Agreement of July 1928, however, the Gulf Oil Corporation was obliged to offload its interests in all regions of eastern Arabia save for Kuwait. The options it had inherited from Eastern and General Syndicate for Bahrain and Hasa respectively were acquired by the Standard Oil Company of California (SOCAL).
The geopoliticisation of oil concessions
SOCAL was awarded the concession for oil rights in Hasa province by Ibn Saud in May 1933, after which eastern Arabian oil concessions were effectively geopoliticised into two blocs - a British sphere of influence along the southern and northern shores of the Gulf and an American sphere of influence dominated by the newly emergent state of Saudi Arabia. This collection of documents concerns itself only with those Gulf states in the British sphere of influence. The records maintained by the Persian Gulf Residency cannot satisfactorily document the history of the Saudi Arabian oil concession, for to do justice to this subject reference would have to be made to sources based largely in Saudi Arabia and the United States.
The Red Line Agreement of July 1928 had the effect of formally conceding American oil companies a role in the Gulf region after years in which the Colonial Office and particularly the India Office had actively sought their exclusion. Nevertheless, the agreement imposed stringent conditions for any American oil company desirous of obtaining a concession in any territory under British protection except Kuwait. As a result, in order for SOCAL to maintain its option in Bahrain, the company had first to create a British subsidiary, the Bahrain Petroleum Company (BAPCO), register it in Canada, ensure that one of its five directors would at all times be a British subject and ensure that as many as possible of its employees were British or Bahrainis. Naturally the whole of the share capital was subscribed to SOCAL. Though Saudi Arabia was intended to be covered by the Red Line Agreement, Britain was hardly in a position to hold American oil companies operating there to the same conditions as she held no exclusive treaty relations with Ibn Saud. As a result, there was nothing to prevent Saudi Arabia granting the 1933 concession to SOCAL.

By this time SOCAL had obtained two important concessions in Bahrain and the Hasa province of Saudi Arabia. It is worth noting that in the mid-1920s Major Holmes had offered the Bahrain concession on more than one occasion to the Anglo-Persian Oil Company, the Iraq Petroleum Company and other British oil groups while the Eastern and General Syndicate held the option for the island. The Anglo-Persian Oil Company had held an exploration concession in Muscat and Oman during the mid-1920s but abandoned the area as unfavourable after only two years.
The rush for agreements in the mid-1930s

It was essentially BAPCO´s discovery of oil in Bahrain in large commercial quantities in 1931 that aroused the interests of British oil companies in actively exploiting the hydrocarbon reserves of the Arab Gulf states. Shortly after this development representatives of the D´Arcy Exploration Company, a major shareholder in the Anglo-Persian Oil Company, began to acquire options from most of the Trucial Coast Rulers. In late 1935 and early 1936 these options were taken over by Petroleum Concessions Limits (PCL), who then proceeded to negotiate concessions with the Rulers. The Iraq Petroleum Company had formed PCL, a wholly owned subsidiary, in October 1935 specifically to prevent other companies from entering those territories under British protection. Oil rights in Qatar had originally been granted to the Anglo-Persian Oil Company in May 1935 and the associated political agreement was concluded in June 1935. The commercial agreement was transferred to Petroleum Concessions Limited in February 1937. No such transfer could be made for the Kuwait concession, awarded to the Kuwait Oil Company in December 1934. The associated political agreement had been concluded eight months earlier in April 1934. The territory of Kuwait had been explicitly excluded from the area by the 1928 Red Line Agreement and thus the Gulf Oil Corporation of the United States was able to hang on to the option it had acquired from the Eastern and General Syndicate in the mid-1920s. The capital of the Kuwait Oil Company was held jointly by the Anglo-Persian Oil Company and the Gulf Oil Corporation. Also in December 1934, the Bahraini Ruler signed the Mining Lease of the Bahrain Oil Concession replacing the earlier one obtained by Holmes for the Eastern and General Syndicate in 1925.
The first Trucial Coast Ruler to initial a commercial agreement with PCL in May 1937 was Shaikh Said bin Maktum of Dubai. He was followed by the Ruler of Sharjah in September of the same year, though the Sharjah concession was widened in 1952 to reflect the re-incorporation of Kalba into the shaikhdom in 1951. This meant that the Regent of Kalba´s separate agreement with PCL of 1938 was now redundant. Shaikh Shakhbut signed the Abu Dhabi commercial agreement with PCL in 1939 though it was not until after the Second World War that Ras al Khaimah (1945), Umm al Qaiwain (1945), Ajman (1951) and Fujairah (1953) concluded concessions with PCL.
PCL obtained two concessions from the Sultan of Muscat and Oman in June 1937, one in respect of Muscat and Oman except for the district of Dhofar and one specifically for Dhofar.
Immediately following the Second World War Petroleum Concessions Ltd began to take a greater interest in exploring for oil in those areas of the south-east Arabian interior for which she held options or concessions. However, because the authority of the Ruler of the hinterland areas of the Trucial Coast and Muscat was so evidently weak and disputed, it became almost impossible to define precisely the territorial extent of each concession.
The nature of concession agreements

Each oil concession agreement for those Arab Gulf states under formal British protection followed an established procedure. The first document to be signed was usually, though not necessarily, a commercial agreement between the company and the Ruler. A second stage usually saw a political agreement between the British Government and the oil company. This stage would ideally be endorsed by the Ruler through an exchange of letters with the appropriate British authorities in the Gulf.
Certainly the international status of the local Rulers improved dramatically during the negotiations for oil concessions. They were now in the unaccustomed position of having others dependent on their actions. Aware of their new found bargaining power, the Rulers did not exclusively hold out for economic benefits in the negotiations. The Ruler of Qatar, for example, secured a formal guarantee of protection from Britain against attack by an external power before signing the May 1935 commercial agreement.
The agreements for Qatar and the Trucial Coast highlighted the contradictions in granting concession areas for indeterminate territories. While the India Office maintained that the concession areas needed no more elaborate definition than ´the territories of the shaikh´, the Foreign Office was much more keen to define limits to territory before granting fixed concession areas. While the Qatar concession was being concluded, therefore, the Foreign Office and Ibn Saud were engaged in ultimately fruitless negotiations for an eastern boundary for the Wahhabi state.


The documentation presented in these twelve volumes concentrates on the negotiations for the first land-based oil concessions in the Arab Gulf states and is derived from the collections housed at the India Office Library & Records, London. The records maintained by the Persian Gulf Residency at Bushire (until 1947) form the mainstay of the collection. These are complemented by selections from the records maintained by the various Political Agencies stationed along the western shores of the Gulf and correspondence from the Political and Secret files of the British India Government.
The files of the Persian Gulf Residency

The Political Resident in the Persian Gulf, who was answerable to the British India authorities, held a pivotal position in the negotiations for the first land-based concession agreements. A rich variety of correspondence appears in the Residency files maintained at Bushire. Answerable to the Resident were Agents stationed at Kuwait, Bahrain and Muscat and elsewhere along the Gulf coast. It was their responsibility to refer important items of policy to the Resident. Both they and the Resident, depending upon the significance of the issue in question, would communicate directly with the Rulers of the Arab Gulf shaikhdoms. The Resident would receive directives from both the Secretary to the Government of India and the Secretary of State for India in London. He would also receive first hand the views of the Foreign Office on various issues of policy and these were frequently at variance with those of the India Office. Furthermore, he communicated directly with representatives of the oil companies, most notably the London-based multi-national Iraq Petroleum Company and the British-owned Anglo-Persian Oil Company (renamed Anglo-Iranian Oil Company in 1935) and the group of smaller subsidiary companies (Petroleum Concessions Limited) developed specifically for the exploration and exploitation of the Arab Gulf states´ hydrocarbon reserves.
Evidence of British imperial strategy
The dispatches contained within the Residency files amply illustrate that before the Second World War strategic rather than commercial considerations dominated the thinking of the India Office with regard to the Gulf. At the turn of the century British India´s chief concern had been to exclude imperial rivals from the Gulf arena. Britain´s exclusive position in the Gulf had been bolstered by the conclusion of a series of treaties, mostly in the 1890s, in which the Rulers of the littoral states effectively placed the conduct of their foreign affairs under Britain´s aegis. Relations between the British Resident and each respective Ruler were essentially passive. So long as the Ruler renewed and abided by their predecessors´ treaty commitments, they obtained British recognition of their accession to power and experienced little interference in their domestic affairs. To India Office eyes the strategic imperative became all the greater in the inter-war years. The overriding objective of safeguarding the imperial air route from Britain to India governed most policy decisions. This strategy governed the conclusion of air agreements with the various Gulf Rulers signed for the landing and refuelling of British civil and military aircraft en route to India. This same concern underpinned most India Office attitudes and decisions when the negotiations for the first Arabian oil concessions intensified in the mid-1930s. It was perhaps largely responsible for the hesitation and indecision Britain displayed in formulating a concerted policy towards the issue of these concessions.


This work is reprinted from original materials in the India Office Library and Records, London. Documents are reproduced in facsimile. A detailed list of contents including library file references appears in each volume. The volumes are organised by country and in chronological sequence. Oil Concessions in Five Arab States 1911-1953 has been prepared by the research staff at Archive Editions.


Chronology of principal events and guide to coverage of the documents
Kuwait - 3 volumes
1911 Anglo-Persian Oil Company (APOC) enquires of Political Resident as to whether an oil concession was available from the Ruler of Kuwait.  
1913 The Ruler of Kuwait and Political Resident exchange letters in which the Shaikh agrees that no Kuwait oil concession would be given except to a person nominated and recommended by the British Government.
1923 Political Agent initiates APOC´s negotiations for oil concession agreement with the Ruler of Kuwait. Major Holmes of Eastern and General Syndicate sends telegram to Ruler of Kuwait informing him of his acquisition of the Hasa concession from Ibn Saud and advising him not to grant any oil concession before first considering his own company´s terms. Ruler of Kuwait rejects APOC´s terms as unacceptable.
1924 Ruler of Kuwait and Ibn Saud jointly grant Eastern and General Syndicate option for Saudi-Nejd Neutral Zone.  
1925 APOC´s prior negotiating rights for Kuwait oil concession agreement lapse.  
1927 Gulf Oil Corporation acquire Eastern and General Syndicate´s option interests in Kuwait.  
1928 Holmes, on behalf of the Eastern and General Syndicate and the Gulf Oil Corporation, negotiates unsuccessfully with Ruler of Kuwait for concession. 1931 Colonial Office ascertains that Ruler of Kuwait would refuse to grant oil concession to any concern not entirely British. United States requests right of equal freedom in negotiations with Kuwaiti Ruler.  
1932 Britain agrees to American request for an ´open door´ policy for American oil in Kuwait. Ruler of Kuwait requests comprehensive concession proposals from both APOC and the Gulf Oil Corporation.  
1933 APOC and the Gulf Oil Corporation become joint and equal partners in negotiating a Kuwait oil concession agreement and the Kuwait Oil Company is formed for this purpose.  
1934 Kuwait Oil Concession Agreement signed by Shaikh Ahmad on behalf of Kuwait and by Holmes and Chisholm jointly on behalf of the Kuwait Oil Company.
Bahrain - 2 volumes

1914 Ruler of Bahrain undertakes not to grant oil concessions to any person or group without prior consultation with the British Government.  
1924 Major Frank Holmes signs agreements to sink artesian wells on main island of Bahrain in search of sweet water.  
1925 Sweet water discovered and Eastern and General Syndicate offered oil concession ostensibly as a reward.  
1927 Holmes tries to resell Bahrain concession to Anglo-Persian Oil Company and other British oil companies without success. Holmes sells option to Eastern Gulf Oil Company, a subsidiary of the Gulf Oil Corporation.
1928 Red Line Agreement signed and Gulf Oil Corporation, as a shareholder in the Iraq Petroleum Company, obliged to offload Arabian oil interests except for Kuwait and Kuwait-Nejd Neutral Zone. Standard Oil Company of California (SOCAL) acquire Bahrain option.  
1929 After long negotiations Bahrain Petroleum Company (BAPCO), a subsidiary of SOCAL, set up and registered in Canada.  
1931 Oil discovered in commercial quantities at Jabal Dukhan.  
1934 Shaikh Hamad signs Mining Lease of Bahrain Oil Concession, replacing 1925 option obtained by Holmes.
Qatar - 3 volumes
1916 Article 5 of the Treaty between the British Government and Ruler of Qatar specifies that no concession will be granted without the approval of the British Government.  
1922 Major Holmes seeks exploratory option from Ruler of Qatar.  
1926 Ruler of Qatar grants option to D´Arcy Exploration Company, a subsidiary of Anglo-Persian Oil Company.

1933 India Office and Foreign Office debate Qatar policy. SOCAL acquires Hasa Concession from Ibn Saud.
1934 Political Resident Lt.Col. T C Fowle reprimands Ruler of Qatar for conferring with Ibn Saud. US Government enquire of British Government as to where eastern boundaries of Saudi Arabia lie. Foreign Office define eastern frontiers of Saudi Arabia as being consistent with Blue Line of 1913 Anglo-Turkish Convention. British authorities deeply suspect subterfuge of Major Holmes as reason for Ruler of Qatar´s intransigence. Political Agent secretly employs Qatari merchant to check upon movements of rival oil companies.  
1935 APOC report concession ready to be drawn up. Shaikh Abdullah, Ruler of Qatar extracts formal letter of protection from Political Resident in the name of British Government. Ruler of Qatar signs Commercial Agreement with Anglo-Persian Oil Company. Political Agreement signed between Anglo-Persian Oil Company and British Government. PCL, a wholly-owned subsidiary of the Iraq Petroleum Company, set up to specifically exclude other oil companies from territories under British protection.  
1937 Concession Agreement of 1935 transferred to Petroleum Development of Qatar Limited, the operating subsidiary of PCL in Qatar.

Trucial Coast - 3 volumes

1922 Rulers of Trucial Coast states sign undertakings not to grant oil concessions to any company not supported by the British Government.  
1935 Shaikh Sultan bin Salim (Ras al Khaimah) officially invites geologists to explore for oil. D´Arcy Exploration Company, a subsidiary of Anglo-Persian Oil Company, granted two-year option to explore for oil in Ras al Khaimah. Hajji Abdullah Williamson leads negotiations for D´Arcy Exploration Company with other Trucial Coast Rulers in attempt to secure oil exploration options. Major Frank Holmes discusses with Political Resident possibility of forming new British venture to bid for Trucial Coast oil concessions: venture fails. Petroleum Concessions Limited (PCL), a subsidiary of London-based multinational, the Iraq Petroleum Company, is formed. Holmes appointed as Trucial Coast representative for PCL.
1936 Shaikh Shakhbut of Abu Dhabi grants D´Arcy Exploration Company a three-year exploration option. India Office approves transfer of D´Arcy options to PCL.  
1937 Political Resident Lt.Col. T C Fowle, perceiving possible competition from American companies, declares that recognition will be given only to those oil concession agreements concluded between Trucial Coast Rulers and PCL. Shaikh Said of Dubai signs first concession agreement with PCL. Sharjah concession agreement also signed.  
1938 Regent of Kalba signs concession agreement with PCL.  
1939 Shaikh Shakhbut signs concession agreement for Abu Dhabi with PCL.  
1945 Ras al Khaimah concession agreement signed. Umm al Qaiwain concession agreement signed.  
1951 Ajman concession agreement signed.  
1952 Ruler of Sharjah agrees to all former obligations regarding oil (principally concession of 1938) accepted by the Regent of Kalba after the re-incorporation of Kalba into the shaikhdom in 1951.
1953 Fujairah concession agreement signed.  
Muscat and Oman - 1 volume
1923 Ruler of Muscat and Oman signs undertaking not to grant concession or develop petroleum resources within his territories without consulting the British Government.
1924 Anglo-Persian Oil Company approach Sultan Taimur proposing that the D´Arcy Exploration Company be granted a two-year option to explore for oil.
1925 Ruler of Muscat and Oman grants exploration option to D´Arcy Exploration Company.
1927 After geologists from D´Arcy Exploration Company survey parts of the Hajjar mountain range in northern Oman and the mountains in Dhofar province, exploration option is allowed to lapse.
1937 Petroleum Concessions Limited (PCL) acquire one concession for exploration of Sultan´s territories excluding Dhofar and one expressly for Dhofar.