Anglo-Iranian Oil Company
The
Anglo-Iranian Oil Company (
AIOC) was founded in
1909, as the
Anglo-Persian Oil Company, following the discovery of a large
oil field in
Masjed Soleiman,
Iran.
Background
The
D'Arcy Oil Concession was granted to the British during the reign of
Mozzafar-al-Din Shah Qajar, a Turkmen descent who was deeply hated by the Iranians, effectively gave away control of Iranian oil reserves to Britain for 60 years.
William Knox D'Arcy had negotiated a 60 year oil concession with the
Shah of
Persia in
1901 but within a few years was almost bankrupted by the cost of exploration. He sold his interest to the
Burmah Oil Company Ltd. who created APOC as a subsidiary, and also sold shares to the public.
Volume production of Persian
oil products eventually started in
1913 from a refinery built at
Abadan. The British government, at the impetus of
Winston Churchill, First Lord of the Admiralty, partly nationalised the company in
1913 in order to secure British-controlled oil supplies for its ships.
APOC took a 50% share in a new
Turkish Petroleum Company organised in
1912 by
Calouste Gulbenkian to explore and develop oil resources in the
Ottoman Empire. After a hiatus caused by
World War One it reformed and struck an immense
gusher at
Kirkuk,
Iraq in
1927, renaming itself the
Iraq Petroleum Company.
The Anglo-Persian Oil Company continued its large Persian operations although it changed its name to the AIOC in
1935. By
1950 Abadan had become the world's largest refinery. In spite of diversification the AIOC still relied heavily on its Iranian oil fields for three-quarters of its supplies, and controlled all oil in Iran. The Iranian government wanted to take a significant share in the company, and would not negotiate when only offered a larger share of revenues. This culminated in the
nationalization of the
industry by the Iranian Prime Minister
Mohammed Mossadegh in
1951, which led to the
Abadan Crisis. Foreign countries refused to take Iranian oil and Abadan refinery was closed. AIOC withdrew from Iran and traded off its other reserves until military intervention restored its ownership in
1954, although it lost its monopoly. It was forced to operate as one member of a consortium of
Iranian Oil Participants.
In the same year AIOC changed its name to .
The crisis began under the government of
Clement Attlee. At the time, the British were taking 85% of Iranian oil profits. In March 1951, the Iranian parliament (the
Majlis) voted to
nationalise the
Anglo-Iranian Oil Company (AIOC) and its holdings by passing a bill strongly backed by the elderly statesman
Mohammed Mossadegh, a man who was elected Prime Minister the following April by a large majority of the parliament.
The
International Court of Justice was called in to settle the dispute, but a 50/50 profit-sharing arrangement, with recognition of nationalisation, was rejected by Prime Minister Mossadegh. Direct negotiations between the British and the Iranian government ceased, and over the course of 1951, the British ratcheted up the pressure on the Iranian government and explored the possibility of a coup against it. U.S. President
Harry S. Truman was reluctant to agree, placing a much higher priority on the
Korean War. The effects of the blockade and embargo were staggering and led to a virtual shutdown of Iran's oil exports.
*
Anglo-Soviet invasion of Persia*
The New US-British Oil Imperialism*
Why the World doesn't trust the West about Petroleum,
Time Magazine, May 19, 2003.
*
A long history of interference in Iran,
Socialist Worker Online, October 29, 2005.
