OIL: From the Bazaars

Wily old (80) Calouste Sarkis Gulbenkian, one of the world’s richest men, reputedly learned to bargain in the rug bazaars of Turkey. So it was no trick for him to block a deal for Standard Oil Co. (NJ.) and Socony-Vacuum Oil Co. in the Middle East. The two oil companies had offered to pay upwards of $150 million for a 40% share in the Arabian American Oil Co.’s Saudi-Arabian concession (TIME, Dec. 23, 1946). Before the deal was made, Trader Gulbenkian wanted to be cut in on it too.

Jersey Standard and Socony, both signers of the famed Red Line agreement* of 1938, had persuaded their British and Dutch partners in the Iraq Petroleum Co., Ltd. to agree to waive any claim to a share in Jersey Standard-Socony’s take from Aramco. But Gulbenkian, the only Red Liner who had signed the agreement as an individual, stood firm. For wangling the original concession in Iraq from the Turks in 1911, he holds a 5% interest in the Iraq Petroleum Co., Ltd. He doggedly insisted that the Red Line agreement still stood; he wanted his 5% cut, in whatever Standard and Socony got out of Aramco.

Last week, in London, Gulbenkian’s lawyers finally brought his mighty antagonists to terms. The terms, as usual, were favorable to Gulbenkian. For waiving any claims to Aramco’s oil, Gulbenkian will get a bigger share of Iraq Petroleum’s oil (as will the French, who went along on the deal). Beginning in 1952, Gulbenkian will be able to buy the extra oil at a price halfway between cost and market price. When he sells, the proceeds will be protected against devaluation of the British pound; the American companies agreed to convert Gulbenkian’s take into hard dollars.

In Lisbon, where he now spends most of his time in his luxurious suite in the Hotel Aviz, Gulbenkian pronounced himself well pleased. Though the agreement will run through 1967, Gulbenkian expected to be around to enjoy it; his father lived to be 110, his grandfather 95.

* For all members of Iraq Petroleum to share & share alike in any new exploitations roughly within the old Ottoman Empire, as shown by a red line that oilmen drew on a map.