companies (see below). The company also got the concession rights to southern Iraq in 1938, and founded the Basrah Petroleum Company (BPC) as their wholly owned subsidiary to develop the southern region of Iraq. IPC partner disputes Three issues caused protracted negotiations among the partner groups of IPC: Revision of the Anglo-Iranian royalty: when the Iraq concession of 1925 was revised in March 1931, and IPC was granted a blanket concession over of territory east of the Tigris River, the question arose as to whether Anglo-Persian's 10 percent royalty should be extended to include the new area. After lengthy negotiations the groups arrived at a compromise settlement in November 1934, which stipulated that D'Arcy Exploration (Anglo-Iranian) would be entitled to a 7.5-percent royalty on such oil as was produced from the covered by the revised Iraq concession, the oil to be delivered free of cost at the field, with IPC paying the royalty due the Iraq Government. Tax matters: since IPC was a British-chartered company, the British groups would not have been subject to double taxation. The non-British groups, however, did not relish the idea of having the earnings of IPC taxed once by the British Government and again by their own governments. Eventually the groups agreed to transfer all pipeline operations to IPC, and price crude to the groups on the basis of management's estimate of British income tax cost plus 1 shilling profit per ton. Under this plan IPC's profits were nominal and its tax liability to the British Government was relatively small. Demise of the Red Line Agreement: two of the American oil companies in IPC were offered a partnership with ARAMCO to develop the oil resources of Saudi Arabia. Their partners in IPC refused to release them from the Red Line Agreement. After the Americans claimed that World War II had ended the Agreement, protracted legal proceedings with Gulbenkian followed. Eventually the case was settled out of court and the American partners joined ARAMCO. The French Government and Gulbenkian had withdrawn their objections in exchange for a greater share of IPC's output, and the Red Line agreement boundaries were redrawn to exclude Saudi Arabia, Yemen, Bahrain, Egypt, Israel, and the western-half of Jordan. IPC Group operations outside Iraq As the Red Line Agreement defined the company's sphere of operations well beyond the boundaries of Iraq, IPC's shareholders were keen to look for oil elsewhere in the