I have the honour to acknowledge the receipt of copy of your
despatch dated 14th July, to the Secretary of State for Foreign
Affairs [1], which you so kindly forwarded to me. On behalf of the
Commonwealth Government I would like to express my appreciation of
the information you have supplied and the measures you have taken
concerning Japanese efforts to acquire a footing in Portuguese
Timor. As you rightly surmise this is a matter of direct concern
to the Commonwealth of Australia and any large Japanese
establishments at Dilli or its utilisation as a base of operations
for further penetration in this part of the world cannot be
regarded with equanimity.

You will recall that we supplied to you through our Trade
Commissioner certain information regarding the activities of a Mr
Manning who proposed to take over the Staughton concessions and
work them on a large scale. However, mainly due to the uncertainty
regarding the validity of these leases owing to the ban of
cancellation hanging over them, he was not successful in forming
his company and has passed out of the picture. This month a Mr
Pascoe, a late Director of Oil Search Limited, has taken an option
over the leases and hopes to induce Oil Search Limited to take
them up. Oil Search Limited is a well-known Australian company
which has been operating in several States of Australia and in New
Guinea for some years and has received grants from the
Commonwealth Government to pursue its oil investigations. It can
command ample capital, but at the moment it is not prepared to
operate the Staughton concessions unless a much larger area can be
obtained. The Staughton concessions altogether cover only about
three thousand acres which is regarded as inadequate for a
thorough geological survey investigation and eventual
exploitation. Consequently Messrs Staughton [2] and Manning are
now endeavouring to see if they can obtain a much larger area,
preferably a concession covering the whole of Portuguese Timor.

The following cablegram was despatched to my Liaison Officer in
London for communication to the British Government:-

'Reference Staughton Concessions Timor oil and recent despatches
relating to possible Japanese penetration. Staughton has granted
option over his rights in Timor to E. J. Pascoe a past director of
Oil Search Limited a well known Australian company which is
receiving grants from Commonwealth Government and which it is
understood from Pascoe is prepared to survey and develop oil
fields in Timor if larger concessions than Staughton leases can be
obtained.

Commonwealth Government would appreciate enquiry through
Ambassador Lisbon [3] to ascertain if oil concessions covering
whole of Portuguese Timor with exception Staughton leases have
been granted any other Company. If not is there possibility of
Staughton or an Australian company commanding ample capital
procuring them and on what terms and conditions.

A direct approach by letter to Governor Dilli by Pascoe in June
last has brought no reply. [4]

If you have been able to have a talk with the new Governors on his
way through to Dilli you may be in a position to let me have
further information as to what is the actual position. I would
appreciate your views on the possibility of acquiring further
concessions.

G. F. PEARCE