Reference despatch D.O.22 of 9th February [1], cablegram 74 of
11th March [2], and your telegram Timor Oil. [3] Desire you act on
and communicate to United Kingdom authorities following views:-

Commonwealth Government has reviewed fully whole position
including suggestions for Netherlands co-operation.

Primary consideration from Australian viewpoint is that Japanese
should not secure concessions in Timor.

Our information is that Wittouck [4] has not obtained any
concession yet, the Portuguese Government having admitted he has
moral claim only. If this is so, then we do not see why Wittouck
should be compensated. On other hand, if in fact Wittouck has a
legal claim all possible steps should be taken to enable Oil
Concessions to obtain further concession to cover whole of
Portuguese Timor.

In the first place Commonwealth Government is anxious not to
become involved and we prefer see Dodson Oil Concessions develop
and exploit concessions with own capital.

The second order of preference would be for the United Kingdom and
Commonwealth Governments jointly to provide financial assistance
to Oil Concessions if this proves necessary. Any proposal to this
end should, however, be submitted to Governments for consideration
and before any commitment made.

The third order of preference would be the formation of an
operating company comprising Oil Concessions, Anglo-Iranian and
Commonwealth Oil Refineries.

We are of opinion that Netherlands interests, through the Royal
Dutch Company, should be invited to co-operate only if nothing can
be arranged about first three proposals.

It is considered that if Wittouck has no justifiable claim, every
effort should be made to obtain prompt decision from Portuguese
Government conceding balance of territory to Oil Concessions.

Ambassador at Lisbon [5] could be instructed to press for this
along with early decision on Darwin-Dilli air route, and also to
obtain information as to precise position of Wittouck.

In respect of air service, you are aware Portuguese Government has
agreed in principle to establishment of service and we have had
draft agreement lodged at Lisbon since August last but Ambassador
cannot obtain final decision. In circumstances, we see no reason
to enlist Netherlands co-operation in this service. Moreover, from
various reports to Foreign Office from Consul-General, Batavia, it
appears Portuguese have refused to entertain a K.N.I.L.M.

extension to Timor since 1937. [6]