Koninklijke Petroleum Maatschappij

Koninklijke Petroleum Maatschappij — the “Royal Petroleum Company”, known in English as the Royal Dutch Petroleum Company — was the petroleum company founded in 1890 on the basis of the 1884 concession secured by Zijlker in the Landschap (self-governing territory) of Langkat on the Sumatra East Coast, immediately adjacent to Atjeh. The company’s history is recorded in Ir. Van der Ploeg’s chapter Mijnbouw in Wat Indië Ontving en Schonk (1946) as the foundation of the modern Indonesian petroleum industry.

Origins: Zijlker’s borings and the 1884 concession

Dr. T. Volker’s Van Oerbosch tot Cultuurgebied (1928) records that Zijlker began test-borings for petroleum near Pangkalan Brandan in 1883, in the Landschap (self-governing territory) of Langkat, directly adjacent to Atjeh. The borings revealed exploitable petroleum, and in 1884 Zijlker secured a concession from the Sultan of Langkat. By June 1892, two years after the Koninklijke was founded, the company was producing 18,000 cases of petroleum per month. Further concessions were opened in 1894 at Telaga Said, Besitang, and Aroebaai. Production grew rapidly: in 1896, 1,851,512 cases were exported; in 1897, 4,564,987 cases. That same year Pangkalan Soesoe was established as a dedicated harbour for the petroleum trade. By 1914, the total export value of petroleum from the East Coast reached ƒ31,000,000.

Volker also identified the Acehnese raids as “one of the serious dangers to which [the petroleum industry] was exposed” (“een van de ernstige bedreigingen, waaraan zij heeft blootgestaan”) — the proximity of the Langkat oilfield to the contested Acehnese frontier made it vulnerable throughout the 1880s and 1890s, until the pacification of 1899.

Foundation

According to Van der Ploeg’s account in Wat Indië Ontving en Schonk, “the first to drill oil in exploitable quantity was Zijlker, and indeed in a concession in the Landschap Langkat in the year 1884. But it was not until 1890 that the Koninklijke Petroleum Maatschappij founded on this came into being.” Zijlker sold his petroleum business to the newly formed Koninklijke for ƒ371,000. The Koninklijke built its first refinery at Pangkalan Brandan in Langkat. The first years were difficult: “the Koninklijke had built a refinery at Pangkalan Brandan, but had to enter at once into competition with American oil on the world market, even if in the beginning [it remained active] on the nearby markets of Singapore and Penang.” The Koninklijke’s first Director, A. J. B. Kessler, succeeded “through almost superhuman effort” in raising production at the Pangkalan Brandan refinery to a level that allowed a modest dividend to be paid in 1895.

Sales organisation and merger with Shell

Kessler secured the help of H. W. A. Deterding — then agent of the Nederlandsche Handel Maatschappij in Penang — for the sale of the Koninklijke’s lamp-oil. Deterding “saw at once the great importance of a good sales organisation, which he therefore, in those days a novelty, set up under his own management.” Tank ships and other transport innovations were pressed into service to maintain the Koninklijke’s competitive position against American oil. After Kessler’s death in 1901, Deterding “took the reins of the Koninklijke alone in hand” and “set himself as a merchant wholly to work for this merger” — that is, for the merger of the Koninklijke with the Shell Transport and Trading Co. of Sir Marcus Samuel, whose petroleum storage and sales business in the East had been built on the 1889 Sanga-Sanga concession of Menten in Koetei, Borneo.

The merger came into effect in 1903 with the founding of the “Asiatic” sales organisation; in 1906 the Bataafsche was founded as the production arm and the Anglo-Saxon as the transport arm. “Slowly most of the petroleum companies that had arisen in the Indies — some fifty in number — were absorbed into the Koninklijke–Shell concern, the last being the Dordtsche in 1911.” The merged entity is the Royal Dutch Shell of the twentieth and twenty-first centuries.

Significance for Atjeh

For the Atjeh-focused reader, the Koninklijke’s significance is the placement of the Langkat oilfield — directly adjacent to Atjeh — at the head of the modern Indonesian petroleum story. The company’s Pangkalan Brandan refinery in Langkat, brought into production under Kessler and Deterding, was the operational base from which the late-colonial Dutch petroleum industry expanded into the wider Indies. The same refinery’s competition with American oil on the Singapore and Penang markets placed the Atjeh-adjacent East Coast of Sumatra at the intersection of Dutch, American and British commercial interests in the late nineteenth and early twentieth centuries.

Dutch terms used in this article

Wat Indië Ontving en Schonk — What the Indies Received and Gave
Wereldbibliotheek N.V. — World Library Ltd.
Nederlandsche Handel Maatschappij — Netherlands Trading Society
Dordtsche Petroleum Maatschappij — Dordrecht Petroleum Company
Koninklijke Petroleum Maatschappij — Royal Petroleum Company
Bataafsche Petroleum Maatschappij — Batavian Petroleum Company
Landschap — self-governing territory
Atjeh — Aceh
Acheh — Aceh
Langkat — Langkat
Deli — Deli
Borneo — Borneo
Sumatra — Sumatra
Pangkalan Brandan — Pangkalan Brandan
Sanga-Sanga — Sanga-Sanga
Koetei — Kutai
merica — pepper (Malay)
Dr. — Doctor
Ir. — Engineer (Dutch Ingenieur)

Account from Schets eener parlementaire geschiedenis (1955)

The following account is drawn from the parliamentary history of the Dutch Second Chamber as narrated by Vermeulen in the colonial section of the 1955 fourth revised edition of Rengers’s *Schets*.

The Koninklijke Petroleum Maatschappij — the Royal Dutch Petroleum Company — is the oil company whose 1905-1910 contract with the Perlak Petroleum Maatschappij to work the latter’s Atjeh fields for ƒ 2.50 per ton of petroleum extracted was the proximate cause of the Article 5a amendment of the Mijnwet in 1910. The episode is the first Atjeh-oil episode in the Vermeulen colonial parliamentary record.

The Perlak-Koninklijke contract

When, soon after the Rengers-era Mijnwet of Cremer had been enacted, Van Heutsz — then governor of Atjeh — reported that the Perlak Petroleum Maatschappij had ceded its Atjeh fields to the Koninklijke for exploitation against a payment of ƒ 2.50 per ton of petroleum extracted, he expressed the opinion that contracts such as the Perlak-Koninklijke contract could equally well be concluded by the Indies government itself, with greater benefit to the treasury. The disclosure was the proximate cause of the Article 5a amendment of 1910.

The Article 5a amendment

To remove doubts about the legal validity of such government-exploitation contracts, the Mijnwet was amended in 1910 by the insertion of a new Article 5a. Henceforth the contracts the government concluded for mineral exploitation would require the approval of the wetgever — legislature — just as ordinary concession contracts already required the approval of the Staten-Generaal.

The Atjeh oil complex

The Atjeh north-coast oilfields — at Pedirse, Peureula, Pasé and elsewhere — would subsequently be developed by the N.L.A.M., the N.K.P.M. and the N.P.P.M.; the Koninklijke was, through its Perlak contract, the first of the major oil companies to operate in Atjeh proper.

Significance

The Koninklijke is, in the Vermeulen colonial parliamentary record, the type-specimen of the private oil company whose operations in Atjeh triggered legislative intervention. The Article 5a amendment of 1910 is the direct parliamentary response to the Perlak-Koninklijke contract.

Account from Vijftig jaren economische staatkunde in Atjeh (1923)

In author Joh. Langhout’s account of the Atjeh petroleum industry, the Koninklijke Petroleum Maatschappij founded enterprises at Lho Seumawè and Peureula in 1899 — the year after Governor Van Heutsz had given European mining his full interest, opening several tracts for private investigation and exploitation. The outstanding concession of the province remaining in later years — that of Zuid Perlak — was, Langhout records, exploited “by de Koninklijke”.

Sources

Wat Indië Ontving en Schonk, onder leiding van Dr. C. W. Wormser (Amsterdam: Wereldbibliotheek N.V., 1946), pp. 252–253 (chapter Mijnbouw door Ir. F. P. C. S. van der Ploeg).

Van Oerbosch tot Cultuurgebied: Een Schets van de Beteekenis van de Tabak, de Andere Cultures en de Industrie ter Oostkust van Sumatra, by Dr. T. Volker (Medan: Deli Planters Vereeniging, 1928), pp. 47–56. Delpher Digital Library, reference DLP-76. Universiteitsbibliotheek Vrije Universiteit Amsterdam, shelfmark 09383.

Schets eener parlementaire geschiedenis van Nederland van 1849 tot 1901, by Mr W. J. van Welderen baron Rengers, 4th rev. ed., Vol. IV: Oost-Indië 1891–1918 by Dr W. H. Vermeulen (‘s-Gravenhage: Martinus Nijhoff, 1955), p. 306.

Vijftig jaren economische staatkunde in Atjeh, by Joh. Langhout (The Hague: N.V. Boekhandel v/h W. P. van Stockum & Zoon, 1923), pp. 68, 83–85, 108, 160–163 (chapter “De Petroleum-ontginning”), illustration captions pp. 160, 162.

tags	organization, company, petroleum, dutch, colonial, acheh, oil
aliases	Koninklijke Petroleum Maatschappij, Koninklijke, Royal Dutch Petroleum Company, Royal Dutch Shell (precursor), KPM (oil), Koninklijke Petroleum Maatschappij in Atjeh

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