Oil Concession Competition between Anglo-American Interests in Qatar - Essay Example

Introduction

Qatar exchanged its interest in foreign affairs such as ceding its territory to the British Government for military protection that may have arose from threats by other nations such as the USD government. The signed treaty provisions included; piracy, slavery and gunrunning, however, the British did not bother to enforce the provisions, and was either reluctant and or not strict. The protection by the British was vital, but the position of Abdullah bin Jassim was insecure. The surrounding tribes were undermant on paying tribes and as such, he felt threatened by the family members who were undermining his rule including the Wahhabi and Bahrain. The merchant princes, Al Thani relied on trade of pearls and de4pended on neighboring tribes to fight on their behalf. Unfortunately, Abdullah bin Jassim sought the British support for loans, military support and weapons which was responded to with reluctant of getting into inland affairs. During the 1930s, the oil concessions changed the competition in the vast region.

Drilling of Oil

Regional disputes escalated due to the oil scramble which resulted in establishment of territorial borders. In 1922, was the year that a conference of setting up boundaries occurred with Ibn Saud to bring in Qatar into an oil agreement with Frank Holmes, the British representative in Uqair. The agreements with the Eastern General Syndicate Company (EGs) concluded the Bahrain’s oil concession in 1925, which was later taken up by the British (BAPCO). Another British representative, Percy Cox, attempted to separate the mainland from Qatar Peninsula. In 1926, an oil survey was conducted under the supervision of a geologist, George Lees, contracted by the Anglo-Persian Oil Company, however, the survey found no oil. The first oil strike in Bahrain was done in 1933 following constant surveillance of Qatar region, by Lees that led to the construction of an oil refinery. In 1935, Abdullah bin Jassim entered into a concession following numerous negotiations. The oil refinery came to completion in 1937, two years after its commencement. Oil from other parts of the vast Gulf region was consolidated into the oil refinery following the construction of a plant to produce aviation spirit. This agreement was to last for 75 years with the Anglo-Persian company representative. In turn, 150,000 rupees were payable yearly including royalties and addition 400,000 rupees upon appending his signature. In line with the concession, more promises were made than previous treaties by the British Oil Company. The IPC, a subsidiary of Qatar’s Petroleum Development Company received the concession through a transfer from the Anglo-Persian and its obligations were to implement the terms of the concession through the Red Line Agreement.

Bahrain took charge of a number of islands in 1936 on behalf of Qatar and herself. Hawar Islands were the largest in size and were located in the Qatar’s west coast, where leaders of Bahrain had established a military base. As a result of the agreement, the British accepted Bahrain’s claim of the objections to Abdullah bin Jassim due to the fact that the Sheikh of Bahrain was to give serve as an advisor. The advisory roles lead to settling legal matters with the British officials. Bahrain went to claim Zuburah, a deserted town in 1937following a dispute with the tribe of Al Nuaim. This angered Abdullah bin Jassim, who sent an armed force who defeated the Al Nuaim tribe and reclaimed it back. As such, the British representative in Bahrain qupported the decision by Qatar’s leader and warned the Bahrain ruler, Hamad ibn Isa Al Khalifa to avoid any confrontations. As a result, Al Khalifa imposed travel and trade sanctions on Qatar.

In 1938, Dukhan had its first oil drilling in Upper Jurassic area after a year of contact survey. The limestone rich area resembled the Saudi Arabia’s fields of Dammam, which had been discovered prior to the Bahrain‘s three years after. The Second World War disrupted the oil drilling. Qatar had experienced economic hardships due to the war which had resulted in food shortages, which commenced in 1920s. The war had also affected the pearl trade, which was later begun in the 1930s with the beginning of the Bahrain sanctions and Qatar’s great economic depression. This resulted in the migration of families to the Persian Gulf in search of better living conditions and the villages were heavily deserted. Following these happenings, Abdullah bin Jassim began to prepare for retirement and appointed Hamad bin Abdullah Al Thani, his son to succeed him.

Anglo-Persian Concession

The first license of oil exploration in Qatar was given to Anglo-Persian Oil Company (APOC) by Qatar’s ruler in 1932. However, the drilling and the extraction process did not start until later after World War II. This license was given by Qatar’s leader Shaikh ‘Abdullah bin Jasmin Al Thani. The exploratory wells in Qatar were drilled later after the exploration process had been commenced and completed in 1920s just like in other Middle East countries.

The exploration process in Qatar was started in 1922 by the father of oil, Major Frank Holmes who was of British-New Zealand origin. This was an exploration lease and was granted to the British owned D’Arcy Exploration Company which was a subsidiary of Anglo-Persian Oil Company and a predecessor of British Petroleum. As part of the exploration agreement, APOC was to submit an application for concession return for the sole exploration right. The importance of oil as a resource in Qatar gained ground and significance after the crisis involved in the Pearling industry which was caused by the introduction Japanese cultured pearls in the Qatar market. The Wall Street Crash of 1929 also played a role in influencing the economy of Qatar to be realigned towards oil especially after the fall in value of luxurious products.

In 1933, two British geologists P T Cox and E. W. Shaw when still carrying out the exploration found that the highest hill in Qatar had the same rock composition with the rocks found within the oil fields in Bahrain. This led to the extension of the first exploration license for eight months until 1933. This set a new begging for the future of Qatar’s oil economy and it set a window for negotiations with Bahrain.

Qatar and Bahrain oil concession

The account of Bahrain oil concession negotiations drew attention to British in an effort to secure the interest of the British Company, PCL over the unallotted area. This was a group of companies which replaced APOC after its concession to control oil exploration and drilling in the entire Qatar. According to Bahrain, American Company, BAPCO had won the concession and British stand no chance. In this case, giving the new concession to British Company would reduce the royalties given to the Bahrain leader by the American Company. The American Company had won the first concession in 1928 and a mining lease in 1934 and threatened the oil production of Bahrain if it was not given the new concession.

On the other hand, BAPCO was opposed the British attempt to get a concession for at least the island of Hawar given to PCL. British realized that its position was tricky as over insistence would mean that it was serving its interests at the expense of Bahrain, which would lead to it losing its control over the gulf region. These negotiations led to Hawar Island being declared a Bahrain territory in 1936 despite Qatar’s contests which were supported by British with an aim of protecting its interest in Qatar and the unallotted area.

In regard to the concession, BAPCO (Bahrain Petroleum Company) requested for an extension of its license from the Bahrain ruler and in respect to the previous dominions which were meant to embrace more unalloted areas. The Indian office had this to say, “In considering any grant of a concession in respect of his 'dominions' or 'Bahrain' it would seem necessary to have a clear understanding as to precisely what is covered”. According to Laithwaite, the Indian officer continued to write; “We have been considering whether there is any risk, in view of the reference to the Sheikh's 'territories' in the Agreement of December, 1925, [the first concession] of a

Claim being put forward by the [American] Syndicate to rights in respect of Hawar and the area in Qatar to which a vague claim is maintained by Bahrein and to which Colonel Loch refers in his telegram of 23rd July No 27 to the Colonial Office. The exploration license granted under the Agreement of 2nd December 1925... is... inrespect of 'the whole of the territories under' the Sheikh's ‘contol.’'. This seems clearly to exclude areas in Qatar and presumably also would exclude Hawar which belongs in any case geographically to Qatar, and is the westernmost and largest of a group of Islands just off the Qatar coast on the west side of the entrance of Duhat-al-

Adhwan.” This lead to the inclusion of Qatar, and its islands in the concession with the British representative, but later the islands were given to the Bahrain nation.