SHARJAH

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08C01297R000500150002-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: September 1, 2012
• Sequence Number: 2
• Content Type: MISC

.:~,_. Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
i ' '~.-
0 '1 ~ c ~E}Np rv/N~ ``
SHARJAH lies near the geographical centre of the United
Arab Emirates. .Its territories are extended by various
enclaves on the eastern coast along the Gulf of Oman, in-
cluding Kalba, Khor Fakkan, and Hisn Diba. (Kalba, formerly
an independent territory, was merged with Sharjah in 1952.)
The population is about 100,000, of -whom some 25,000 to
35,000 are native Sharjans, a relatively high number for the
Gulf. The remainder are migrant workers from the Arab world
and the Indian sub-continent, with some 10,000 European
expatr-fates -as well.
The shaikhdom was formerly a member of the Trucial States
under British protection and was an important base until
Britain's military withdrawal from the Gulf.in 1972. In
December that year it joined with Abu Dhabi, Dubai and other
shaikhdoms to form the UAE. - - - -
Under the energetic leadership of its Ruler, Shaikh Sultan
bin Mohammed al Qasimi, the country has launched on a period
of economic expansion and development. The Ruler is following
the ambitions of his predecessors to make Sharjah as rich as
its neighbour, Dubai. It was the discovery and exploitation
of oil that has made these plans possible.
Problems Over Oil Development
Sharjah's oil development has been hedged about wi-th problems.
The first exploration attempts by the IPC subsidiary Petroleum
Development (Trucial Coast) Ltd in the late 195Os/early 196Os
failed to find oil and~its onshore and offshore concessions
- were relinquished. Further drilling by the US independent
Mecom, Pure Oil, and Union of California, was also unsuccessful.
In 1968 the Ruler invited bids for concessions both on and off-
shore and in February 1970, Buttes Oil and Gas Company and the
Clayco Petroleum Corporation - US independents which had not
previously operated abroad - acquired the rights to a 562 square
miles offshore concession in territorial waters including all
islands and their territorial waters and the contiguous offshore
areas in the Gulf.
The islands mentioned included Ab1LMusa (some 30 miles off the
west coast of Sharjah) and two other islands, all of which were
claimed by Iran. The conflict was resolved when, after the
British withdrawal, the Ruler of Sham a concluded an agreement
with the Shah under which Iran occupied Abu Musa but the
shaikhdom was allowed to continue drilling; reveaaues from any
of pro motion were to be shared. Iran made a grant to Sharjah
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
 of ?12 million .a year until such time as the state had an
oil income amounting to not less than ?3 million a year.
On conclusion of the agreement, Sharjah confirmed Butte's rights
to the concession. A consortium, Crescent Petroleum Company,
was formed in which the partners were Buttes (as operator
with 35 per cent), Ashland Exploration Co (25), Skelly Oil", in
which Getty had a 70 per cent interest, (25) Kerr McGee Corp
(12.5), and Juniper Petroleum Corp, a Buttes affiliate,
(2.5). Cities Service later acquired a 10 per cent inie$est,
reducing--Buttes' share to -25-.7--per___cent_and. Juniper _to _. ___
The first field discovered was Mubarak o~~f Abu Musa islana~
late in 192. The discovery well, Mubarak A-1, was tested
O t ber that ear at a combined .rate of 13,955 barrels
o y
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
SHARJAH
per cent.- -
in c
-daily with 30.25 million cubic feet per day of-ga-s. A second
well was tested in June 1973 at a combined production rate-from
three producing zones of 59,500 b/d. The oil was of high
quality with only 0.6 per cent sulphur content. Production
began in July 197.4, after remarkably quick development work.
The Ruler spoke of possible production of about 200,000 b/d
by the end of 1974. But a problem arose over its ownership.
~In the earlier days of oil exploration and the argument with
Iran, Shar ' ah fleclared that its territorial wat,e~s.-:e-x~en,__d,e~d
~~o T instead of three miles,. As applied to the island of
Abu. Musa,_this conflicted with concession rights already
awarded by the Shaikhdom of Umm al Qaiwain to Occidental, another
US oil group, before Sharjah extended its territorial waters-.
The British, in their last days~of power, had for-bidden both
Buttes and Occidental to drill in the disputed waters until the
conflict was resolved. But following Britain's withdrawal
and solution of the dispute with Iran, Sharjah's Ruler con-
firmed Buttes' rights.
Occidental disputing the grant to Buttes, brought the matter
before the US Courts. Two lower Court actions were dismissed
and a petition to the Supreme Court for a review of the dis-
missals was rejected on the 24th October 1972. In spite of
this, Occidental continued its claims and a $-100 million suit
was filed against Buttes in the California Supreme Court, only
to be dismissed in February 1973. Further legal actions
followed, including a warning by Occidental to prospective
buyers of Mubarak crude that it was prepared to use all
available legal remedies to recover either the crude oil or
the proceeds from any sales. Soon after production began in
Occidental took steps to attach the first consignment of
97
,4
1
crude from Sharjah to Lake Charles, Louisiana. This again
failed, as did another suit filed against Buttes in the California
Supreme Court in 1975.
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
i
 ~,1 . ri=- Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
SHARJAH -. 3
These various territorial disputes have meant a heavy cut
in Sharjah'.s actual income. from oil. As mentioned, Iran
receives a half share of the proceeds from Mubarak, and
Sharjah also-pays 30 per cent of its remaining share to
Umm al Qaiwain in settlement of their past delineation
problems. 'The government "take" in tax and royalty has
been estimated at between $7 - $8 per barrel. Production
averaged about 38,000 b/d in both 1975 and 1976, rising
higher towards 50,000 in 1977.- The average revenue is
estimated at about $36 million.
Development- -Pr-oblems -
~1-,~~ ~
The Mubarak structure lies between 13, 000 and 14,000 ------_...~
below the seabed in a water depth of 200 feet, which makes
it the deepest cil-producing reservoir in the Gulf so far.
'The very high well pressure, combined with the particular
type of geological formations, has caused problems usually
involving the sheering of the well casings. Cne well had
to be abandoned altogether in 1975. These conditions make
the cost of production high, estimated at $2.5 to $3 per
barrel compared witr., for example, $1 per barrel offshore
Abu Dhabi. This is somewhat compensated-for, however, by
the high quality of the ail, which commands a high premium.
It is sold directly to the shareholders in the consortium
and goes mostly to the USA although same has been taken to
Japan under exchange arrangements. The quantities of associa-
ted gas are too small to make exploitation worthwhile.
Nominally, of course, Sharjah comes under the UAE's membership
of OPEC. It has little official contact with the Federal
Ministry of Petroleum, however, and the Ruler makes his
.agreements with the oil ccmpanies quite independently. Since
the Emirate is anxious to encourage exploration and production
in areas which are frequently difficult, there is as yet no
question of participation agreements. The Ruler's expansion
plans for Sharjah rest largely on increased oil and gas output;
it is equally certain that the present income from that source
is not sufficient for what he intends. Much depends, therefore,
on future prospects for exploration and development.
Crescent is concentrating on developing its existing field so
that exploration elsewhere is not contemplated for the moment.
Other oil-bearing structures are thought to exist inside the
company's concession area. One of these may be in the four
kilometres wide corridor between Dubai and Sharjah, ownership
of which is claimed by the former. (The close grouping of
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
 Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
SHARJAH - 4
the members of the Emirates perhaps makes boundary disputes
inevitable, particularly when there is a question of oil
involved.) Crescent had relinquished one-quarter of-its-
concession,under the terms of the agreement with the Ruler,
by 1976. The new concessionaire is Houston Oil and Minerals
and the company has begun work on that-area.
Onshore, Sharjah appears to have had nearly as many problems
as in the offshore concessions. In 1969 a concession was
granted to Shell in partnership with Bomin Bochumer Mineralol-
gesellchaft, as well as another concession to Shell on its
own:- -The area on the mainland covered 2,100 square kilo-
metres. But the territory-was relinquished in December 1971,
a ter two dry- holes had been drilled-: - The -next company to
acquire onshore territory was Crystal Sharjah but it, too
gave up the concession in the face of high drilling costs.
Tt had attempted to bring on stream production from a well
drilled earlier by Shell, but was unsuccessful.
In July 1976, the Ruler granted Nicklos Drilling Company and
Pinnacle Oil and Gas, tv~n Texas independents, exploration
rights to the 1,000 kilometres of territory relinquished by
Crystal.- Under the terms of the agreement, any oil was to
be shared 60/40 in favour of the government. The companies
have committed themselves to investing $12 million in the
.first three years and are to drill three holes of 16,000 feet
over a period of 30 months. The companies began seismic
work in.the area known as .Sharjah West and equipment capable
of drilling to 25,000 feet has been brought in. Exploration
is difficult in the area near the mountains but there have
been some oil-shows there in the past.. The last area remain-
ing is that offshore the east coast where Sharjah possesses
the enclaves mentioned earlier. This area is shared with
Fujairah and a concession for the whole of it has been granted
to Reserve Oil and Gas which is currently operating there.
255
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
 ~=: Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
;' DECTQI ~,~
~Ci-I A R_I A Fi
INTERNATIONAL 8OUNDARV
RIGHTS RELINQUISHED DURING 1976
Declassified and Approved For Release 2012/09/01 :CIA-RDP08C01297R000500150002-1
:.
~c~~ r-Haiu
l ' FUJAIRAH
RAS AL ~,
, KHAIMAH ~`
~~ SHARJAH
'
~+
` ~J
'
,
~
t
\~.
{
~ ~ AJMAN ~.~
~~r' ptlBAl
AJMAN..
ROMAN'
?
PIPELINE
PETROLEUM RIGHTS