Page 412
APP
APPENDIX II
PURCHASES OF DOLLAR OIL BY BRITISH COMPANIES
British-controlled companies before the war regularly purchased oil from other producers and refiners in order to fulfill their own marketing needs.. Refinery operations were not flexible enough to ensure that the product outturn of a particular company equalled its product demand and, in any event, there was often considerable profit in petroleum "jobbing."
2. Since the war the freedom of purchase has been restricted to sterling oil or to direct exchange of oil and, to a considerable extent, the deficit companies can balance out their needs with the surplus companies. Nevertheless, permission to purchase oil for dollars has been given to meet short-term deficiences or long- term requirements. In addition certain purchases are made as part of reciprocal arrangements whereby other products are sold for dollars.
Contracted Purchases
3. The contracted purchases are:--
(1) By A.I.O.C. from Socony Vacuum of motor spirit and gas and diesel oil. These contracts were made at a time of great shortage and were facilitated by offering concurrently a contract for substantially larger quantities of products from Abadan. The contract to purchase ceases at the end of 1950, but the sales contract continues until end 1952. (2) By Shell of Casinghead. Casinghead gasoline is liquefied from natural gas given off at wellhead. It is used for blending with low grade naphtha in the proportion of 1 in 3 to yield commercial grade motor spirit and in the production of aviation spirit. The present contract ends in December, 1949, but Shell have intimated that they will probably want to continue to make this purchase in 1950.
(3) By Shell of gas oil and crude oil from Mexico. This purchase was made at a time of acute shortage and at an advantageous price. The contract ends in December, 1950.
(4) By Trinidad Leaseholds Ltd. (T.L.L.) of crude oil. In return products are sold back for dollars at a profit. The contract is being renegotiated but covers a period of some years.
(5) By Shell and A.I.O.C. of a proportion of that crude oil which Mr. Gulbenkian receives from his 5 per cent. interest in the Iraq Petroleum Company.
(6) By Manchester Oil Refinery (M.O.R.) of crude oil of special specification for the manufacture of lubricating oils that would otherwise only be available for dollars.
(7) By Berry Wiggins of special grade crude.
The contracts for the last three are on an annual basis.
Lubricants
4.
Certain basic grades of lubricants can only be bought in United States and British companies have not finalised plans for producing them.
The bulk of the present sales to countries outside the sterling area are for dollars as part of F.E.24 trade and so are not a net dollar cost. No allowance is made for the continuation of this trade in 1952 and 1953.
Certain purchases are, however, to supply the sterling area and this deficit will be wiped out by 1952.
Other Products®.
5. Petroleum coke of a suitable grade for electrodes is bought for dollars and minor quantities of special grade waxes and petroleum chemicals.
37457 Page 412 of 662
Page 412
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Page 413 PURCHASES OF OIL, 1948-Page 413 of 662
By A.I.O.C. from Stanvac-
Motor spirit
Gas/Diesel oil
000 tons
1948
1949-50
1952
1953
178
166
155
190
***
By Shell-
Casinghead gas
Mexico contract-
Motor spirit
Gas/Diesel oil
Fuel oil
Crude
...
Other deficit purchases-
Motor spirit Gas/Diesel oil
Fuel oil
•
By Trinidad Leaseholds, Ltd.-
Crude oil
Gulbenkian
By M.O.R.-
Crude oil
By Berry Wiggins-
Crude oil
Lubricants
Petroleum coke
:
...
:.
:::
:
:.
:..
:
:
:
:
::.
:.
...
Ministry of Fuel and Power,
29th July, 1949.
...
:
:
282
252
75
145
160
148
265
270
196
649
119
462
807
769
$769
170
340
66
54
100
100
103
110.
96
225
181
5
10
8920
10
29290
96
10
APPENDIX III
CHANGES IN THE ESTIMATES OF THE 1953 OIL BALANCE OF PAYMENTS
Dollar Balance of Payments Position
1. The 1953 dollar deficit on oil is, on latest estimates, expected to be $500 million. A year ago it was calculated that with the oil companies' plans as then envisaged our deficit with the Western Hemisphere on oil would be $220. At that time we looked at the Western Hemisphere as a whole and took credit for sales to South American countries. It is now felt desirable only to take credit for sales for actual dollars and to American account countries (Canada, Venezuela, Colombia, Cuba, Haiti, Dominican Republic, Panama, Philippines, Ecuador and Central America. Expenses in any of these countries are taken into account as representing dollars. The E.P.C. (48) 72 figure for 1953 should, in fact, be increased by $137 million to bring the two estimates into line. The reasons for the changed position are as follows:
Improvement in 1953 dollar position—
$ million
Reduced purchases of dollar oil by British companies Reduced value of the United States share of trade in Sterling Area
(due to price changes)
61
Reduced net dollar expenditure on equipment
56
121
Deterioration in the 1953 dollar position—
Reduced value of sales (partly as the result of a reduction in quantity (3 million tons (mostly crude) value $65 million) partly as a result of lower prices)
230
Increased cost of tanker freight
Increased operating expenses
Page
Net Deterioration of 662
20
....
12
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