The Rise Of Australasia

Chapter 1018: Chapter 766: Splitting and Merging

When intelligence organizations began to actively recruit Jewish talent, good news also came from Europe, indicating that the British had agreed to cooperate with Australasia on oil prices.

In fact, it was inevitable. For the United Kingdom and Australasia, which occupy the Persian Gulf region, the best outcome would be cooperation for mutual benefit.

Up to now, the existence of oil fields in the Persian Gulf has been an undeniable fact. The whole world knows there are a plethora of oil fields in the Persian Gulf, and there’s nothing any country can do about it.

Because the oil fields in the Persian Gulf are firmly controlled by two countries, which are currently the world’s first superpower, the United Kingdom, and the third, Australasia.

If these two countries cooperate, the situation in the Persian Gulf region is as unshakeable as steel. Even if France and other powers were to unite, they would certainly not be a match for these two nations.

Of course, part of the reason is that the other powers are facing one problem or another and do not have the strength of their peak periods.

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After discussions between the two sides, the United Kingdom and Australasia decided to form the Persian Gulf Alliance to control the oil prices in the world regions.

The operating method is quite simple. When oil prices are high, all the oil companies under the two nations will increase extraction to balance and reduce oil prices.

When oil prices are low, the oil companies owned by the two countries will reduce extraction to boost the price of oil.

Because they hold the majority of the world’s petroleum, they don’t worry about competition from other nations.

Take note, the oil fields in the Persian Gulf region are shallow, which means the development costs are much lower.

Plus, considering the large scale of the oil fields, at present, there isn’t any nation that could contend with the Persian Gulf Alliance formed by the union of the two nations.

The first item on the agenda after forming the Persian Gulf Alliance was to discuss the current direction of oil prices.

Based on the opinions of both parties, it was finally decided to control the price of oil at around 3.35 Pounds per barrel, which is about 6.7 Australian dollars.

Taking into account transportation costs in various places, the price of oil will vary a bit. It is expected that the final average world oil price might be between 6.8 and 6.9 Australian dollars, which is about the current limit for oil prices.

After all, both Australasia and the United Kingdom are merely looking to earn sufficient profits from oil at the moment.

The real strategic objectives through oil will likely be reached during future intensified conflicts.

By the time World War II breaks out, nations around the world will realize just how important the oil alliance between Australasia and the United Kingdom is.

When the price of oil rises to a level that other nations simply cannot afford, oil will become an important strategic resource that is tantalizingly out of reach for the enemies of the two countries.

Although a selling price of around 6.7 Australian dollars per barrel of oil doesn’t seem very high, the extraction cost of the Persian Gulf oil fields is indeed very low.

Looking at the current extraction situation in the oil fields controlled by Australasia, the cost per ton of crude oil is about 3.7 Australian dollars.

One should note that this is just the extraction cost per ton of crude oil. One ton of crude oil can fill about 7.33 barrels (specifically according to the density of the crude oil, that is, the degree of its thickness or fluidity), with each barrel holding 42 gallons, equal to 158.99 liters.

Spread across each barrel of crude oil, the extraction cost is only about 0.5 Australian dollars. This also means that with each barrel of crude oil sold, Australasia could earn a gross profit of 6.2 Australian dollars.

After deducting the transportation costs of the oil, the losses during transportation, and the varying oil prices in different areas, the final profit per barrel of crude oil is approximately between 5.5 and 5.8 Australian dollars.

Seeing such figures, Arthur could not help but marvel at the immense profits brought by the oil trade.

The current global oil market can be described as an oligopoly. In 1929, the total world oil production reached a staggering 120 million tons.

Before the United States was dissolved, its oil production ranked first in the world. However, after being divided into several countries, the throne of the world’s top oil producer passed into the hands of the British.

According to the data of the colonies and oil fields held by the British, in 1929, the British oil production amounted to 49.21 million tons, accounting for 41% of the world’s total oil production.

Australasia came second, with a total oil production of 17.98 million tons, accounting for 14.98% of the world’s total oil output.

The Lone Star Republic was third, with a total oil production of 15.47 million tons, accounting for 12.9% of the world’s total oil production.

Russia Nation followed in fourth place, with a total oil production of 11.49 million tons, accounting for 9.5% of the world’s total oil production.

The South Coast Federal Republic ranked fifth, with a total oil production of 10.85 million tons, accounting for 9% of the world’s total oil production.

Venezuela was sixth, with a total oil production of 6.53 million tons, accounting for 5.4% of the world’s total oil output.

Mexico was seventh, with a total oil production of 3.22 million tons, accounting for 2.7% of the world’s total oil production.

Romania came in eighth, with a total oil production of 1.95 million tons, accounting for 1.6% of the world’s total oil output.

Beyond these, Canada, Peru, and Argentina also have a considerable scale of oil industry, but their shares are not very high, as none of their oil productions have exceeded one million tons.

From this ranking of oil production, the oil outputs of various nations may seem to be flourishing.

But those who understand the global situation would know that although some countries’ oil production seems high, it has already been controlled by the powers.

The produced oil is sold to the powers at a low price, generating no benefit for their own country and people.

Even in the production of petroleum, the local people were forced to become oil workers, an indirect form of exploitation by the Powers.

Although the Frenchmen were not on the leaderboard, the oil of the Lone Star Republic and the South Coast Federal Republic was jointly controlled by the French and the British.

Plus, many of the world’s oil regions were influenced by French capital, which was why the French achieved the feat of not being on the list, yet French capital was everywhere.

Of course, France was still destined not to be able to compare with the United Kingdom. The UK’s extensive Colonies possessed numerous oil-producing areas, especially the Persian Gulf, where large oil fields had already been discovered.

If the world’s main oil-producing regions were in the United States for the first 30 years of the 20th century, then the focus would gradually shift to the Persian Gulf coastal areas in the time to come.

Even more importantly, the development of oil along the Persian Gulf was easier and the cost much lower.

Although the output of American oil seemed massive, the cost was about half the selling price of the oil, greatly reducing the profit margins.

Since Arthur had already formed a partnership with the British, there was no reason for him to shy away from the Persian Gulf region.

Truthfully, if it weren’t for concerns that the British had designs on the Persian Gulf, Australasia would have already started extensive oil extraction there.

Thanks to the vast oil reserves of the Persian Gulf, Australasia could easily become one of the major oil-exporting countries and even monopolize half of the oil market.

This was much more economical than what the United States had achieved before. The Americans could not reach even half of the oil export profits, while Australasia could achieve over 70%.

Arthur’s next plan was to try to catch up with Britain in terms of oil production. After taking over some of the American oil fields, Britain’s scale and output of the oil industry already accounted for nearly half of the world’s total oil production.

This scale was huge and was something that had to be guarded against and addressed. The yearly oil trade brought the British enormous profits, which they would use to arm themselves even more powerfully.

This was not necessarily a good thing for Australasia, and the same was true for the situation in Europe.

What Arthur could do was to try to capture the oil market without falling out with the British.

This was not just about the benefits that could be gained at present but also about the achievements that could be made in the oil sector when World War II broke out.

After the establishment of the Persian Gulf Alliance, Arthur had also restructured and consolidated Australasia’s oil companies.

The first was the huge Persian Gulf Oil Company, a joint enterprise of the royal family and the government, and the main target of this integration.

The current oil market was an oligopoly; for Australasia to secure enough of the oil market, it had to develop an oil behemoth.

The Persian Gulf Oil Company was the most suitable choice. Not only was it a joint enterprise of the royal family and the government, but it had also been rooted in the Persian Gulf region for a long time and owned many oil fields there.

Of Australasia’s annual oil production, the Persian Gulf Oil Company’s share was more than half, illustrating the company’s market share.

After consulting with the government, Arthur merged several royal-controlled oil companies into the Persian Gulf Oil Company and, together with the government, increased their investment proportion.

Following the restructuring and consolidation, there were far fewer oil companies than before.

At the forefront was the Persian Gulf Oil Company, which had two subsidiaries under its umbrella: the Australasian National Petroleum Company and the Royal Oil Company, becoming the titan of the Australasian oil industry.

There were also changes in the shareholding ratios.

Starting with the Persian Gulf Oil Company as the parent company. The Australasian Government invested another 30 million Australian dollars, and with the addition of several oil field extractions rights, held 51% of its shares.

The Royal financial group reinvested 25 million Australian dollars, along with some oil extraction technology, to hold 45.8% of its shares.

The Nobleman United Consortium invested 5 million Australian dollars, taking 2% of the shares.

The Royal Relief Committee invested 3 million Australian dollars, accounting for 1.2% of the shares.

For the National Petroleum Company under the Persian Gulf Oil Company, the ownership ratios were: the National Government 50%, the Royal financial group 10%, and the Persian Gulf Oil Company 40%.

With such a shareholding structure, the National Government could hold 70.4% of the shares and control the National Petroleum Company.

The same was true for another subsidiary, the Royal Oil Company. The ownership ratio was 50% for the Royal financial group, 10% for the National Government, and 40% for the Persian Gulf Oil Company.

In the end, the Royal financial group held 68.32% of the Royal Oil Company, thus dominating the company.

As for the Nobleman United Consortium and the Royal Relief Committee, they were simply created to generate some income for these two institutions.

After all, the Nobleman United Consortium needed to distribute a lot of funds to all nobility every year, and the Royal Relief Committee also had to distribute a lot of subsidies to the country’s impoverished groups, both with significant expenditures.

Such a mixed equity structure not only allowed the government and the royal family to achieve a win-win situation but also enabled them to control their respective oil companies, preventing conflicts between the royal family and the government over financial issues.

Although Arthur could ensure the loyalty and obedience of the Cabinet Government during his tenure,

he would not be able to stay on the throne forever, as succession passed down. Avoiding problems early on would also allow future monarchs and governments to get along better.