British Diplomatic Oil Crisis: Contemporary Anglo-Saxon Geopolitical Rivalries in the Persian Gulf: Drawing a Lesson? Or Sir Anthony Eden‘s Delusion of Grandeur.

CHAPTER TWO

1948: LABOUR AND THE COMING
OF THE CRISIS

Oil and British government involvement,
1914-1948

As was
noted in the previous chapter, on 28th May 1901, William Knox
D’Arcy entered into agreement with the Iranian Government to exploit
oil. After protracted negotiations the contract included the
following provisions:

1. The exclusive right
   for 63 years to exploit petroleum
   throughout the Persian Empire, with the exception of five
   provinces in north Persia.

2. On the date of the
   formation of the first exploitation
   company the Persian Government was to receive £20,000 in
   cash, £20,000 in paid up shares and ‘annually a sum equal
   to sixteen per cent’ of the Company’s profits.

3. On expiration of the
   concession all ‘materials, buildings
   and apparatuses’ of the Company should become the property
   of the government.1

D’Arcy’s syndicate struck oil
in 1908 in the southern province of Khuzistan
and the Anglo-Persian Oil Company (APOC) was incorporated in 1909. The
field, Masjid-e Sulaiman, proved among the richest then known in the world.
A 140-mile pipeline was laid to Abadan, an uninhabited island in the estuary
of the Shatt-al-Arab, where a refinery and loading terminal were
constructed. The refinery was ready in 1913 in time for the First World War.

The whole enterprise had been
an expensive undertaking and it proved
necessary to seek the help of another investor, the British Government
itself, where the First Lord of the Admiralty, Winston Churchill, had been
persuaded of

1. PRO London, CAB 129/47
   CP (51) 257, Memorandum by Herbert,
   Secret, 26th September, 1951, p.1.

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