The conclusion is that (b) and (e) rule out (g); but that (c), the continuing uncertainty surrounding supplies from the Middle East, justifies modifying the basic principle (a) to the extent of (h), the granting of a site by private treaty as move to encourage China to develop as an alternative source of supply (d). In other words, our experience in respect of supplies in 1979 was such as to justify the Government going back, in part, on its assurance of 1975 to the other oil companies. Our experience was that, although we think the oil companies did their best to maintain supplies, the fact is they were unable to do so because of their dependence on the Middle East. And the fact that Esso also relies on the Middle East, is the counter-argument to (f).
11
If CRC is granted is site by private treaty, there is no doubt that the other oil companies will complain. It is proposed to respond that, because of events in 1979, the Government considers it to be in the interests of Hong Kong consumers further to encourage China as an alternative source to the Middle East; but that, as CRC has been given no concession on the premium, the Government has not given CRC any direct commercial advantage. The multinational oil companies will also probably press for a restatement of the Government's policy towards oil companies from China. It is proposed to reply that the Government's present intention is to treat oil companies from China no differently from oil companies from elsewhere; but that this intention may have to be modified if circumstances so dictate.
12
Accordingly, it is proposed that a private treaty grant of the site in Chai Wan on the basic terms set out in paragraph 13 below, should be made to the China Resources Company.
Basic Terms
13
Subject to the approval of this Council, the following basic terms have been provisionally offered to and accepted by the China Resources Company for the site at Chai Wan as shown on the plan at Annex A:-
Site Area
2
Approximately 6, 150 m2 (66, 198 sq ft)
Lease Term:
User
:
75 years (non-renewable) from date of possession.
For storage and distribution of petroleum products and ancillary offices.
CONFIDENTIAL