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The Asiatic Petroleum C° (Egypt) Limited
Agents: Worms & C° Port Said

23rd. September, 1914
The Asiatic Petroleum C° (Egypt) Limited
London

Dear Sirs,
We wrote to you last on the 8th instant, in reply to your letter of the 8th August. The mails seem to be taking at least 12 days each way, so that it is too early yet to expect your answer.
We would now inform you that Mr Tarrell has requested us to hand him (and this we have done) a certified copy of each of our Proforma Account Sales for Egyptian kerosene beginning with March last, and he desires us to send him these documents weekly in future, also a copy of our monthly Proforma for Egyptian liquid fuel. Nothing further has transpired on the question of the maximum net return, and we have not of course raised the point ourselves, as we prefer to know your views first, as asked for in our letter of 1st September. We would mention however, that the net return on Suez kerosene has risen in some weeks since we last wrote to you, well over the 4/-. As an example we may say that our net return the week before last was 4/4, and in contrast it should be remarked that our net return last week fell to 3/l 3/4. The 4/4 d is the figure which our present prices realise when selling in the restricted area around Suez, Zagazig, Port Said, to which we have heretofore confined ourselves for the Suez kerosene, and this figure is quite intelligible, when you reflect that the prices have been fixed (as they are everywhere) on the basis of freight from Alexandria. To take the extreme case, the Suez local price, as agreed with the V.O.C°, is the Alexandria one plus freight, or P.T.1 per unit. When we sell Suez oil in Suez, we incur, naturally, no freight; consequently the net return is immediately enhanced by 5 d per unit. The 3/l 3/4 d of last week illustrates the effect on our net return of the contract under which we are supplying the State Railways till the end of this year.
We have been exchanging telegrams with the Asiatic re the distribution of Suez kerosene on a wider scale, and we are now preparing to send this kerosene all over Egypt, so as to deliver up to 400 tons of it weekly. The greater part of this will have to go out in bulk, in tank wagons, our tin filling arrangements at Suez being on a very small scale - at present, pending the provision of the further facilities we have asked for at the Suez Refinery, entailing the erection of storage, for which we have sent plans and estimates to the Asiatic. We hope we shall be able to deal with the 400 tons weekly in one way or another, and not have to disappoint you. The matter is now being carefully gone into and calculated out with our Suez and Alexandria branches. Cairo, of course, takes a very big quantity of bulk, but we can only touch the fringe of that resource, as it is desirable to keep the motor barge running and she can only run from Alexandria.
The main feature in the market at the present time is the great slackening in the demand, which we estimate to be from 20 to 25% less than it was this time last year, and it rather looks as though this failing off in the consumption would accentuate as time goes on. The V.O.C° are putting considerable pressure on the Government to increase the minimum price at which they are allowed to sell, pleading that they cannot afford to bring another cargo from America at present selling prices. The Government suggested that the V.O.C° should sell at a higher figure than we, but they replied that this would be impossible. What the V.O. C° are really trying to do, therefore, at the moment is to force the Government to release you from your engagement as regards the Anglo-Egyptian Oilfields. This strikes us as rather cool, and we are not giving the least encouragement to the V.O.C°'s schemes. The Government would like us to promise to carry the whole trade at present prices, but of course we cannot promise anything of the kind. We have informed Mr Monteith Smith privately, however, that our stock position is very favourable at present and that we are prepared to increase our deliveries ad libitum, in those circumstances. We do not imagine the V.0.C° will really withdraw, if they cannot get a higher price. It is even possible they may be glad, a little later on, to sell as much as possible at present rates, as it is quite likely the world price of kerosene will fall, owing to the ravages of this war, and it seems to us that America will be glad of any outlet for her surplus production. Our opinion is that from the very first the Vacuum Oil C° have acted unwisely, and that even now they have not learned wisdom. It is not for us to complain, of course, but rather to rejoice at the fact.
We are, dear Sirs,
Yours faithfully,