Haifa to Be Terminus of Iraq Oil Pipe-line: Convention Between Palestine Government and Iraq Petrole

A five-thousand word convention regulating the transit of the mineral oils of the Iraq Petroleum Company through Palestine territory signed on January 5th. by the High Commissioner, Sir John Chancellor, and Mr. J. Skliros, on behalf of the Company, is published in the “Official Gazette” here to-day.

In consideration of the benefits which the country will derive, the Government desires to facilitate the undertaking, the convention says, and goes on to provide as follows:

The oil pipe-line will terminate on the Acre Bay area (also known as the Haifa Bay area) extending along the Palestine coast from Haifa to Acre), the duration of the convention being for seventy years.

No works may be erected on any places of religious worship or of antiquity. The Company’s products, if marketted locally, will be subject to the same duties as imports. But special facilities will be granted in view of the exceptional nature of the undertaking, for loading and unloading ships by day or night and on public holidays. The Company’s ships will obtain reduced rates on cranage and wharfage, and the Company will be entitled to construct its own ports. Specially reduced railway rates are granted in view of the large tonnage and passenger traffic, and the Company may construct its own railways and roads.

The Company undertakes to employ local labour, but is allowed to import labour if the local supply is insufficient.

The Company is exempted from property or income tax. The Government undertakes to lease on a nominal rent State lands, and to expropriate private lands. The Company will require normal protection to be given for the undertaking and the Company’s employees.

The Company is allowed to provide at its own cost for education, police, sanitation, water, light and other services, ordinarily provided by the local authority.

At the expiration of the concession at the end of seventy years, all rights, immovable property and fixtures will become the property of the Government, free of charge, unless the concession is extended for a further period or is renewed. The convention may be cancelled if the necessary agreements with other countries through which the pipe-line passes are not completed within the course of three years.

GOVERNMENT RETICENCE ABOUT DETAILS OF AGREEMENT WHEN SIGNATURE WAS REPORTED MONTH AGO: MATTER VERY DELICATE HIGH OFFICIAL TOLD J.T.A.: RIVALRY BETWEEN PALESTINE AND SYRIS FOR IRAQ OIL PORT: SUGGESTION THAT PIPE-LINE MAY BE TAKEN TO TWO PORTS – ONE IN PALESTINE AND ONE IN SYRIA: NEGOTIATIONS BETWEEN IRAQ GOVERNMENT AND IRAQ PETROLEUM COMPANY: PETITION TO LEAGUE OF NATIONS BY BRITISH OIL DEVELOPMENT COMPANY THAT IRAQ PETROLEUM COMPANY IS NOT DEVELOPING OIL FIELDS AND ASKING FOR ANULMENT OF ITS CONCESSION: BRITISH GOVERNMENT REPLY REPUDIATES CHARGE: MANDATES COMMISSION DECIDES TO REQUEST LEAGUEIS COUNCIL TO ENQUIRE OF BRITISH MANDATORY GOVERNMENT WHETHER JUDICIAL AUTHORITY EXISTS COMPETENT TO PASS UPON MATTER

The fact that an agreement between the Palestine Government and the Iraq Petroleum Company had been signed, fixing Haifa as the terminus of the Iraq oil pipe-line was reported from Jerusalem in the J.T.A. Bulletin of January 10th. Palestine Government circles were extremely reticent, however, about confirming the report or giving details, and a high Palestine Government official told the J.T.A. that the matter was extremely delicate and that a statement was impossible for a little time.

In November, the Under-Secretary for the Colonies stated in reply to a question in the House of Commons that no agreement had yet been reached with regard to the proposed pipe-line from the Iraq oil fields to the Mediterranean coast. There was at the time a suggestion that there might be bifurcation, with one pipe-line debouching at Haifa and another at Alexandretta, in French Syria, and in reply to a further question on this particular point, the Government stated that if bifurcation takes place, the cost will naturally fall upon the Company which builds the pipe-line.

Last October, the Prime Minister of Iraq, Nuri Pasha, issued a statement on the negotiations which he had conducted during his stay in London from which he had just returned, with the representative of the Iraq Petroleum Company. A complete understanding, it was stated, was reached on all disputed questions except one point, which related to the annual royalty. But there was a certain measure of agreement between the demands made by the Iraq Government and the proposals of the Company. In a later official communique issued last month, the Iraq Government stated that the Prime Minister had since been informed by cable that Mr. Skliros (the signatory to the present convention with the Palestine Government) had been deputed by the Company to settle outstanding matters. It appears, the statement said, that the Company is prepared to afford all facilities towards reaching an agreement.

At the last meeting of the Permanent Mandates Commission of the League of Nations held in Geneva in November, a petition was considered from the British Oil Development Company of London, contending that the development of Iraq’s oil fields is not being served by the concession to the Iraq Petroleum Company, and in support of the Company’s contention, the petition pointed to an article written in a French financial paper by Sir Henry Deterding, the General Managing Director of the Royal Dutch Petroleum Company, whose interests in the Iraq Petroleum Company are well known, in which he said that “in France’s interest it might be well to raise the question whether the oil of Mesopotamia should not rather serve as a reserve for the future, and whether it is wise to squander this reserve as quickly as possible, as would be the case if France, out of three-quarters of the total threw a quarter upon the market”.

The petition further contended that the concession held by the Iraq Petroleum Company was null and void, on the ground that certain obligations had not been carried out by it. The case of my Company in a nut-shell, the petition concluded, is as follows: The policy of the Iraq Petroleum Company is not consistent with the immediate development of the oil fields of Iraq. As their concession is now no longer in existence there is nothing to prevent the Iraq Government granting a concession to the British Oil Development Company, an influential Company which is ready and willing to develop the oil fields of Iraq without delay.

IRAQ PETROLEUM COMPANY ALREADY EXPENDED £ 3,500,000 IN DEVELOPING OIL RESOURCES AND CARRIED OUT DRILLING PROGRAMME MORE THAN 5 ½ TIMES GREATER THAN REQUIRED OF THEM BY CONVENTION BRITISH GOVERNMENT REPLY SAYS: EXPENDITURE NOT YET LED AND CANNOT LEAD FOR SOME TIME TO RECEIPTS OF APPRECIABLE REVENUE AND SUCH POSITION CANNOT BE RECONCILED WITH ALLEGED POLICY OF CALCULATED INACTION: MATTER OF PUBLIC KNOWLEDGE M. RAPPARD POINTS OUT THAT MANDATORY POWER HAS INTERESTS IN IRAQ PETROLEUM COMPANY AND CONSEQUENTLY STRONGEST REASONS FOR NOT EXPOSING ITSELF EVEN TO SHADOW OF SUSPICION

The British Government, in its reply to the petition, argued that the complete text of Sir Henry Deterding’s article showed that the purpose of the article was to discourage the French Government from using the French share of the oil to be extracted from Iraq to assist small importing firms to compete in the markets of France with the powerful oil concerns, and was not written, as the petition of the British Oil Development Company suggested, as part of a general recommendation for retarding the development of the oil resources of Iraq. Upon this article being brought to the attention of the Board of the Iraq Petroleum Company, the British Government further said, they reaffirmed in a formal minute that their policy was to bring the Iraq fields to commercial production as early as possible.

As to the argument that the concession granted to the Turkish Petroleum Company, now the Iraq Petroleum Company has become null and void by reason of certain acts or enissions on the part either of that Company or of the Iraq Government, the British Government proceeded, the Government can see nothing to bear this out. In the opinion of His Majesty’s Government, the best evidence that the charge against the Iraq Petroleum Company is wholly unfounded, and that the policy of the Company is and has been one of early and full exploitation, is to be found in the fact that the Company have already expended some £3,500,000 in testing and developing the oil resources of Iraq, and have carried out a drilling programme more than five and a half times greater than that required of them by their Convention with the Iraq Government. This heavy expenditure has not yet led and cannot for some time lead to the receipt of any appreciable revenue. Such a position, the British reply concluded, can scarcely be reconciled with a policy of calculated inaction as attributed to them by the British Cil Development Company.

Following consideration of the petition and the British reply, the Mandates Commission of the League of Nations decided to request the Council of the League to enquire of the Mandatory Power whether there exists a judicial authority competent to pass upon the matter which forms the subject of the British Oil Development- Company’s Petition.

The Rapporteur on the question, M. Rappard, pointed out in the course of the discussion that it is matter of public knowledge that the Mandatory Power has interests in the Iraq Petroleum Company, and in consequence, as its accredited representative had said, it had the strongest reasons for not exposing itself even to a shadow of suspicion.

Should the reply of the Mandatory Power to the question whether or not the petition of the British Oil Development Company can be dealt with by an Iraq or a British court be in the negative, the resolution of the Mandates Commission moved by M. Rappard and adopted by the Mandates Commission says, the Commission reserves its right to examine the petition, basing its action on the duty incumbent upon it to see that the policy pursued in the territories under Mandate is in conformity with the interests of the inhabitants. If on the other hand, it appears that the petitioners can have recourse to a court, the Commission desires to reserve its views until the decision of that court has been made known to it.

Six members of the Commission voted for the proposal, two abstained and two voted against the proposal.

FRENCH CLAIMS BACKOD BY SYRIAN POPULATION: LEBANESE PARLIAMENT’S DECLARATION THAT ESTABLISHMENT OF MOSUL PIPE-LINO TORMINUS IN PALESTINE WOULD EXCLUDE FRENCH MANDATED TERRITORIES FROM PARTICIPATION IN EXPLOITATION OF OIL CONCESSION AND RUIN BEIRUT PORT: THE PROSPECT OF HAIFA BECOMING ENTREPOT OF EAST: AN OLD ZIONIST DREAM

The French Government, in its efforts to secure a point on the Syrian coast as the terminus of the Iraq pipe- line, has had behind it the feeling of the population of Syrian. The Lebanese Chamber of Deputies, at one time adopted a formal resolution, declaring that the establishment of the Mosul pipe-line terminus in Palestine would exclude the French Mandated territories from participation in the exploitation of the oil concession, and would mean the ruin of the Syrian port of Beirut.

French interests base their claim on the San Remo Agreement, by which they under took to grant transport facilities through Syria, in pressing the demand that the pipe-line should be laid to Alexandretta on the Syrian coast. It has been pointed out in this connection that from a commercial standpoint the French proposal has in its favour the fact that it would effect a saving of over a hundred miles in pipeline, but on the other hand, once initial expenditure has been made and the line laid, the all-important question is upkeep and guarding the line, and in this regard the line to Haifa has to recommend it the fact that it would be laid through open country in Iraq and Palestine and could be easily ###trolled.

The laying of the Iraq oil-pipe line to Haifa, the building of the Haifa Harbour, which is now in progress, and the contemplated building of the Haifa-Baghdad Railway, which is understood to be imminent, will make the Haifa Bay area in Palestine, it is believed, an important industrial and commercial centre, with warehouses and factories growing up around the Harbour, and a big agricultural hinterland all along the Haifa Bay area able to meet the needs of this growing enterpot of the East, which authorities claim it is bound to become.

Most of the land of the Haifa Bay area, along the coast between Haifa and Acre, is in the possession of the Jewish National Fund, which acquired a large tract about two years ago. Zionists have since the earliest days of the movement placed great hopes in the development of this area, and Dr. Herzl, in his “Old -New Land” dwells on this part of Palestine (Haifa, Carmel and Haifa Bay) as being of special importance.

When the Palestine Gusrantee Loan of £ 4,500,000 was voted by Parliament in 1926, Mr. Amery, then Colonial Secretary, dwelt in the course of his speech on the natural advantages of Haifa for becoming one of the great harbours of the Middle East. The building of the Haifa Harbour (which is being carried out under the provision made in the Palestine Loan) Mr. Amery said, would enable a great development to take place not only in Palestine, but perhaps throughout the whole Middle East, and, he added, I am not excluding the possibility of railway development from Haifa across to Iraq.

Sir John Hope Simpson, in his report of October 1930, also refers to this question. The future of this tract, he writes, will be advantageously affected by the construction of the Haifa Harbour, Work is already in progress and is advancing rapidly. The harbour will greatly assist the development of the export trade in oranges, and perhaps other agricultural products. It is understood that the question of the pipe-line from Iraq is not yet decided, and that there are hopes that it may be constructed to Haifa. If this development occurs the Acre Plain will of course benefit still further.

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