278 Mr S. M. Bruce, High Commissioner in London, to Mr R. G. Menzies, Prime Minister

Cablegram 358 LONDON, 25 May 1940, 9.45 p.m.

SECRET FOR THE PRIME MINISTER

Your telegram 22nd May. [1] Timor. My definite impression is that Dodson and Oil Concessions are not in a position to carry out their obligations under concession, that no assistance Governments would be prepared to give would put them in a position to do so and that if the matter remains in the hands of Oil Concessions they will default on their obligations and concession will be cancelled.

The Anglo-Iranian, with whom are now associated Shell and American interests, consider the concession quite unsatisfactory and would require its modification before they would take any action. The alternatives are- (1) that present concession should be allowed to be cancelled and combined concession interests should send a representative to Lisbon to endeavour to negotiate a new one.

This would however throw the field open to die Japanese to try and obtain the concession in competition with the oil companies.

(2) that Oil Concessions should transfer the concession to the oil companies on payment of their out of pocket expenses.

The oil companies would then send a representative to Lisbon to try and obtain the modifications they require in concession and the Portuguese Government might agree to these modifications in view of the great value to Portuguese of major oil companies interesting themselves in oil possibilities of Timor.

A meeting is being held as soon as practicable between representatives of oil companies, Foreign Office, Mines Department and myself to review the whole position.

BRUCE

1 Document 259.
[AA: A981, TIMOR (PORTUGUESE) 22, v]