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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

Afghanistan,   pp. 597-614 PDF (6.5 MB)

Page 600

  5. Within one year following the selection of the five provinces the
Company will commence at least one well.
  6. In the event of the discovery of oil in sufficient quantity to war-
rant commercial exploitation (the Company being the sole judge) the
Company agrees to continue development without delay and en-
deavor to reach an ultimate production of 6,000,000 tons per annum.
(Note: The A. I. 0. C. did not reach this production level until 1930.)
  7. If any province or provinces do not prove productive after the
first twenty years of the concession, one such province shall be sur-
rendered, and similar surrender of unproductive provinces one at a
time shall take place at five year intervals.
  8. The establishment by the Company of railway, telephone, tele-
graph, radio or aviation services shall be conditioned on prior con-
sent of the Government.
  9. The Company will pay the Afghan Government a royalty of
four shillings per ton on petroleum sold in Afghanistan or exported.
(Note: Same rate as paid under new A. I. 0. C. agreement.) Detailed
steps to be taken in case of currency fluctuation are prescribed.
  In addition the Company agrees to pay the Afghan Government,
a sum equal to 20 % of the distribution to common stock shares of the
Inland Exploration Company in excess of distributions equal to 5%
on the invested capital. (Note: Same as A. I. 0. C. agreement.)
  Regardless of the status of operations the Company guarantees that
payments to the Afghan Government shall not go below 2250,000 for
the second five year period following ratification and that subse-
quently the minimum shall be 2450,000. (The A. I. 0. C. minimum is
2750,000 under the above headings.)
  10. During the first fifteen years of the concession the Company, in
exchange for tax exemption, shall pay the Afghan Government nine
pence per ton on oil produced up to 6,000,000 tons, and six pence per
ton thereafter, and during the following fifteen years one shilling and
nine pence, respectively, under the same conditions. After thirty
years a new rate shall be established by agreement between the con-
tracting parties. (Note: This is exactly the same as in the A. I. 0. C.
agreement as regards rates but omits any reference to a minimum
such as is stipulated in the case of A. I. 0. C. in the amount of
  11. Provision is made for facilitating the acquisition of property
needed by the Company.
  12. Sale of gasoline, kerosene and fuel oil in the country shall be at
a basic rate fixed by the f. o. b. price of Rumanian or Gulf oil minus
25% for sales to the Government and minus 10% for sales to an
Afghan company to be designated by the Afghan Minister of Trade.
(Note: Identical with A. I. 0. C. agreement as regards price of sale.)
  13. Goods for the staff may be imported freely upon payment of
usual duties and taxes. Medical equipment and materials for the
Company may be imported free of duty.
  14. The Afghan Government promises to lend its moral support in
securing the consent of any foreign government through whose terri-
tory it may be desired to export oil.
  15. No restriction shall be placed on the import or export of funds
of the Company or its personnel.

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