William Fraser’s Statement To AIOC Stockholders
| Arash Norouzi |
This is a financial report from the Anglo-Iranian Oil Company in advance of their annual meeting. Presented by AIOC chairman William Fraser, it ran as a paid advertisement in English, Australian and Canadian newspapers and trade journals from around June 8 - July 2, 1952.
The statement reviewed their necessary increase in production from non-Iranian sources and included a review of the failed World Bank mediation with the British and Iranian governments over the nationalized properties.
COMPANY MEETING
ANGLO-IRANIAN OIL COMPANY
INCREASED SUPPLIES FROM OTHER SOURCES OFFSET IRANIAN CESSATION
Sir William Fraser’s Statement
The 43rd annual general meeting of the Anglo-Iranian Oil Company Ltd. will be held on June 26 in London, England.
The following is an extract from the statement to stockholders by the Chairman, Sir William Fraser, C.B.E., covering the year 1951:
The gross trading profit of £71,377,882, compared with £115,495,994 last year, results from all of the widespread activities in which the Company is interested.
After providing for taxation on profits from all sources, the amount available for reserves and dividends is £24,233,505, compared with £33,102,572 for 1950. Your Directors have allocated £1 million to Preference Stock Reserve, bringing the total to £9 million and have placed £16 million to General Reserve, which now stands at £81 million. They have recommended a final dividend of 25 per cent., less income tax, on the Ordinary stock, making 30 per cent, for the year.
In my statement to you last November I described the course of events which had so gravely injured the Company’s interests in Iran. Towards the end of last year the International Bank for Reconstruction and Development approached the
British and Iranian Governments and offered its good offices to assist in the settlement of the differences between them, both being members of the International Bank.
Subject to the agreement of the parties the Bank intended, in its role as a neutral and impartial institution, to set up for limited period of time a temporary management for the operation of the oil properties which would be responsible to the Bank: there was however no intention of the Bank engaging in oil operations permanently or as a business venture. The aim would be to achieve agreement on a temporary arrangement (covering a period of two years or less) whereby efficient large-scale operations in South Iran might be restored, in the interests of Iran, the United Kingdom and the Bank’s members as a whole, and in the hope of creating an atmosphere suitable for the negotiation of a final settlement.
There followed a series of discussions, after which a joint communique was issued by the Iranian Government and the International Bank indicating that no agreement had been reached on several important points. The Bank later published a detailed review of the negotiations in which it was explained that the main unresolved issues were concerned with the status of the Bank during the period of its operations in Iran, with the employment by the Bank of British technicians and, thirdly, with the price at which oil might be sold by the Bank.
In the absence of agreement on these points it will be realised that a basis for the operation of the industry did not exist. In addition the question of prices at which oil would be purchased by the Company was explored with the Iranian Government and no conclusion was reached.
Operations in the oilfields of Iran continued normally until June, 1951, except for a slight interruption due to a strike in April. In June production was cut back and in July was shut in as export had ceased and storage was full.
Compared with 1950, there was a decrease during 1951 of 15,573,000 tons in the oil production at our disposal from Iran, and an increase of £6,820,000 tons from our share of production in Kuwait, Iraq and Qatar. During 1952 our supplies from these three sources are expected to be about 26,000,000 tons, compared with 16,632,000 tons in 1951. Our crude oil production in the United Kingdom was 45,100 tons. In Scotland production of shale was 1,411,000 tons, yielding 104,500 tons of oil.
Our exploration activities continue in various parts of the world. In Papua, where we work in partnership with American and AustraJian interests, two deep wells were drilled during the year and one gravity and three seismic exploration parties were active. Owing to complex geology and difficult working conditions in tropical forest, progress is slow.
The statement then referred to the refining operations in Iran until activities ceased in Iraq, Kuwait, France, Italy, Belgium and Germany.
In Great Britain, throughputs at Llandarcy and Grangemouth were greatly increased. Good progress has been made with construction of our Kent refinery, which it is hoped will start operations at half its eventual 4,000,000 tons per annum capacity during this coming Summer.
In Australia the Laverton plant of Commonwealth Oil Refineries treated 143,000 tons of crude oil in 1951. We have decided to build a new refinery at Kwinana, near Fremantle, which will have a capacity of 3,000,000 tons a year.
The commissioning in May, 1951, of the Finnart to Grangemouth pipeline across Scotland enabled the greater part of our crude oil supplies for Grangemouth refinery to be imported by this route.
In my last report I informed you that the British Tanker Company’s fleet numbered 153 ships of 1,854,000 deadweight tons. Since then two old ships have been sold and our new 28,000 ton ships have been delivered, making the present
total 155 ships of 1,950,000 deadweight tons. There remain under construction or on order 21 ships totalling 426,000 deadweight tons. We have on charter about 2,000,000 deadweight tons of tanker shipping, more than half of which is fixed for several years ahead.
Although tankers are being built at a rate of about two million deadweight tons annually, more than half of them in British shipyards, the world tonnage has remained barely adequate to demand and consequently freight rates have remained high. Further substantial orders have, however, been placed, both in the United Kingdom and elsewhere, including many ships for comparatively early delivery.
World demand for petroleum products increased by approximately 12 per cent. in 1951 compared with the preceding year, this high rate of expansion having thus occurred for two years in succession. In meeting so striking an increase in world consumption despite the cessation of supplies from Iran at the end of June, the world oil industry has once again demonstrated the strength of its resources and the flexibility of its operations.
After supplies from Iran had ceased in July we supplemented the fullest use of our own crude oil and refineries by hiring refining capacity and by purchases from other sources. The result was that our sales for the year declined only by some 2,000,000 tons from the 1950 total of 38,500,000 tons, although events in Iran deprived us of some 15,000,000 tons of supplies from that source. Our largely increased supplies of crude oil from Kuwait, Iraq and Qatar have more than offset the discontinuance of our crude oil exports from Iran. The increased supply of refined product from our own refineries and from processing arrangements made with other refiners cannot, however, meet our marketing requirements. We shall continue to supplement our own supplies of products by purchases where we can do so on satisfactory terms, thus using every endeavour to conserve both our good will and a sound trading position until such time as we have available supplies from our own resources sufficient to enable the Company once again to go forward and expand its business as in the past. Profit margins on such purchases have suffered from the high rates of freight which have prevailed, and the extent to which this purchasing policy can be followed is governed by many factors and is constantly under review.
A major change took place during the year in the marketing of motor spirit in the United Kingdom, where schemes were introduced under which the service station or garage owner can, if he wishes, undertake to sell exclusively the motor spirit of one company, or, as in the case of the scheme operated by our marketing company, the motor spirit of a selected number of companies. Similar developments have taken place in Australia, New Zealand, and South Africa. By the adoption of this method and by the closer co-operation with the dealer it is hoped to secure economies of distribution and to improve the standard of service to the motorist.
Related links:
Anglo-Iranian Oil Company’s Name Changed to British Petroleum Co., Ltd. (BP) | Dec. 1954
Tension In Iran Eased By Dropping Of Sabotage Law | INS, June 29, 1951
British Should Share Oil Profits and Learn to Take Orders in Iran To Ease Tensions | 1951
MOSSADEGH t-shirts — “If I sit silently, I have sinned”
