[News] A Short History of BP

Anti-Imperialist News news at freedomarchives.org
Wed Jun 16 12:10:39 EDT 2010


June 16, 2010

Beyond Petroleum, Beyond Pollution, Beyond Politics

A Short History of BP


British Petroleum is the UK’s largest 
corporation. It is among the largest 
private-sector energy corporations in the world. 
It is a vertically integrated cartel that 
operates oil and natural-gas exploration, 
marketing, and distribution all over the globe.

BP, however, goes beyond petroleum, indeed, 
beyond business. The mess we have today in the 
Gulf of Mexico is not the first time BP has 
committed crimes against the environment and 
against people. This is a proverbial drop in the 
bucket for BP. This outfit has been cheating humanity since its inception.

Many people do not know that BP was born, named 
after, and committed many crimes against the 
people of Iran. For nearly 80 years, it seized 
the wealth of that nation, interfered in its 
politics, and destroyed its future.

The history of crude-oil exploration and 
production in the Middle East began with William 
Knox D’Arcy (1849-1917), a British subject living 
in Australia who became very rich very 
quickly­twice. D’Arcy, a lawyer, invested in gold 
mines in Rockhampton, Queensland. After becoming 
a millionaire by the end of 19th century, he and 
his family returned to England.

In 1901, D’Arcy obtained a concession from the 
government of Iran to drill for mineral 
resources, with the exception of the five 
northern provinces the Russians wanted. This 
concession, called the “Green Document,” was 
written on a page of green paper signed by the 
Shahanshah, king of kings, of Iran. D’Arcy was to 
pay the government of Iran £20,000 in cash and 
£20,000 in stock in the proposed operation, plus 
a royalty of 16% of net profits from all 
enterprises formed under the agreement.

D’Arcy founded the First Exploration Company in 
1903. He never set foot on the land that made him 
a wealthy man. D’Arcy conducted business through 
representatives and later through the UK 
government. He hired G. B. Reynolds, an 
experienced geologist-engineer, to oversee the 
drilling. Reynolds had worked in India and been drilling in Sumatra.

Reynolds had visited Baghdad frequently and had 
paid close attention to local legends, especially 
the stories about Zoroastrian temples built on 
eternal fire and tar pits in southwestern Iran. 
He hired scouts from local nomadic tribes. These 
were akin to Native Americans guiding Ponce de Leon to the Fountain of Youth.

He had two areas in mind. The very first attempt 
at drilling in western Iran, in Qaser Shirin, 
near the border with the Ottoman Empire, was 
disappointing. A third well was drilled near 
Masjid Sulaiman, 80 miles northeast of Ahvaz, the 
capital of Khuzestan province. There was no oil here either.

D’Arcy had spent more than £225,000 to no avail 
and was ready to sell his precious Green 
Document. He mortgaged his remaining gold 
holdings but was still running out of money. 
D’Arcy telegraphed Reynolds and told him to close down the operation.

But Reynolds was sure he would find oil. He 
telegraphed back and asked for written 
confirmation to be sent by mail. While waiting 
for the mail, which normally took two weeks, he 
and his scouts followed their noses day and 
night, searching for that rotten-egg smell. 
Reynolds ordered drilling for a fourth well where 
he had found traces from a natural seepage in the same vicinity as the third.

This one was a gusher. The crude shot 50 feet 
over the derrick from a well that was 1,180 feet 
deep. On May 26, 1908, the most significant 
chapter in the history of the Middle East­if not the whole of mankind­opened.

By its 100th anniversary, this well had produced 
more than one billion barrels of light crude oil. 
Reynolds had struck one of the world’s richest 
oil fields on the edge of the Persian Gulf basin. 
With 314 wells, the Masjid Sulaiman field was 
still producing about 7,000 barrels of oil per 
day in the early 1980s.  And this was only the 
first of many productive Persian Gulf reservoirs.

In 1909, D’Arcy formed the Anglo-Persian Oil 
Company (APOC). Britain’s First Lord of the 
Admiralty, Winston Churchill, had been following 
the progress of the burgeoning petroleum industry 
because he was thinking of converting the British 
navy’s ships from coal to oil, which he 
implemented in 1911. In order to protect its 
supplies of this now-crucial military resource, 
the British government became part owner of APOC 
in 1914, acquiring 50 percent of the voting 
stock, reimbursing all of D’Arcy’s expenditures, 
and granting him £900,000 worth of shares. D’Arcy 
remained a director until his death in 2000. In 
1923, the company secretly paid £5,000 to 
Churchill to lobby the UK government to grant 
APOC a monopoly on Iranian oil resources (Myers 2009).

The rush was on. Western oil companies eventually 
attained total control over the middle-eastern 
oil industry. These companies often became de 
facto rulers of these semi-colonial territories. 
All aspects of exploration, production, refining, 
and marketing were controlled by these 
multinational corporations. The owners not only 
discouraged but prevented native populations from 
obtaining the skills and education to manage 
their own resources, and workers were treated no better than slaves.

In 1935, the Iranian government sent a memorandum 
to all foreign embassies in Tehran to address the 
country by its correct name: Iran­not Persia. 
Persia, or Pars, is only one of 30 provinces in 
Iran; Greek historians mistakenly assumed that 
all people in Iran were Persians, and the British 
and others kept repeating this mistake (Kamiar 
2007). APOC was forced to change its name to Anglo-Iranian Oil Company (AIOC).

Oil concessions generally covered very large 
areas and were for long durations. They paid a 
small, fixed, non-negotiable royalty. Until 1953, 
AIOC was paying Iran a 16% royalty. The 
government of Iran was not even allowed to check AIOC’s records.

More importantly, these oil imperialists were 
supported by the full military might of their 
respective governments. Iran’s shah, who was 
installed by the Allies in 1941, headed a corrupt 
dictatorship. There is no telling what or how 
much he stole from his people. With the help of 
these corrupt shahs, first backed by the British 
then by the US, AIOC appropriated the lion’s share of Iran’s wealth.

By the post-WWII era and the beginning of 
decolonization, educated people in Iran realized 
the country was in effect occupied and controlled 
by AIOC. They’d had enough. Coinciding with the 
growth of a new nationalist fervor in the region, 
the shah was forced aside, remaining primarily as 
a figurehead, and a new prime minister, Mohammad 
Mossadeq, was elected in 1951. Mossadeq, with the 
approval of Majlis (the Iranian parliament), 
nationalized Iran’s oil industry. The British 
government contested the nationalization at the 
International Court of Law, but its complaint was dismissed.

The British had, in effect, been kicked out of Iran.

AIOC responded with a boycott of Iranian oil, but 
that was not enough to bring the country to its 
knees. The British then approached Washington for 
help. Nothing much developed during the remainder 
of the Truman presidency, but the incoming 
president, Dwight D. Eisenhower, was a very close 
friend and ally of Churchill’s and did not ignore 
his comrade’s pleas for assistance.

In 1953, the year Eisenhower took office, the CIA 
went into action, in partnership with the 
British. Eisenhower approved the plan, called 
Operation Ajax, of instigating a counter-coup 
designed to return the shah to total power. The 
director of the operation was Theodore 
Roosevelt’s grandson, Kermit Roosevelt, who 
headed the CIA’s Middle East division. The CIA 
paid out $1 million to hire demonstrators­mostly 
gang members, prostitutes, drug addicts, and 
thugs (Gelvin, 2005, p. 279; Fayazmanesh, 2003, 
p.4). This same tactic had been used successfully 
in Italy in 1948 to prevent the communists from 
winning the elections. Operation Ajax, mostly 
planned by Donald N. Wilbur, an architecture 
expert, was also supported by few ayatollahs, 
powerful landlords, and big merchants. The riots 
and chaos that ensued did the trick, and Mossadeq 
was forced to resign. (See Alexander Cockburn's 
<http://www.counterpunch.org/cockburn06112010.html>The Crude Truth.)

When the shah triumphantly returned to Tehran on 
August 19, he personally expressed his gratitude 
to his savior, Kermit Roosevelt, for putting him 
back on his Peacock Throne. Upon returning to the 
US, Roosevelt accepted a job with Gulf Oil. He 
remained in demand as a consultant and liaison 
between American oil companies and Middle Eastern governments.

The shah’s return opened a reign of terror, 
funded by the US, in Iran. Mossadeq was found 
guilty of treason, spent three years in solitary 
confinement, and was put under house arrest until 
his death in 1967. The majority of his 
supporters, however, were turned over to firing 
squads. Mossadeq’s foreign minister, Hossein 
Fatemi, was taken from a hospital to be executed.

In return for US help, AIOC agreed to share its 
Iranian concession with US oil companies. 
American victory in Iran resulted a newly formed 
oil consortium, expansion of the right of 
extraterritoriality (meaning US and UK nationals 
could not be tried in Iranian courts), and the 
establishment of SAVAK, the shah’s secret police. 
SAVAK was created in 1957 with CIA assistance and 
US tax dollars. Its primary mission was to 
eliminate threats to the shah. Its tactics 
included censorship, “disappearances” of dissidents, torture, and execution.

The shah showed his gratitude to US 
foreign-policy makers. During the wars of 1967 
and 1973 between Israel and its Arab neighbors, 
the shah provided cheap fuel for the Israeli war 
machine even as Arab members of OPEC decreased 
oil production and created an oil embargo 
directed at the western nations, causing oil 
prices to quadruple in two months. By 1975, as 
the world’s second-largest oil producer (after 
Saudi Arabia), Iran was earning nearly $20 
million per hour. Much of this money went to the 
US as Iran became the largest purchaser of American weapons.

In 1954, AIOC changed its name to British 
Petroleum. In 1959, BP expanded beyond the Middle 
East to Alaska, and in 1965 it was the first 
company to strike oil in the North Sea. Today, 
the oil company that began in Iran has gone 
global. It has oil wells and gas stations on all continents.

At $1 million, the counter-coup in Iran seemed 
like a bargain for the US. But was it? Drawing a 
straight line from the overthrow of Mossadeq’s 
government in 1953 to the Iranian revolution of 
1979­and perhaps to the events of September 11, 
2001­we begin to see Operation Ajax’s ultimate 
cost in terms of money and lives.  From 1953 to 
1979, Iran was a BP prison, polluted and poor, 
run with an iron fist by the company and its puppet, the shah.

Now it is drilling offshore near the US in the 
Gulf of Mexico. Many Americans in the region are 
beginning to feel the pain and outrage Iranians 
endured for 70 years­getting a small taste of how BP goes Beyond Politics.

Dr. M. Kamiar is a professor of geography at 
Florida State College. With Professor Stanley D. 
Brunn, he is editing Native World Geography. Each 
chapter on a region in this book is going to be 
written by a geographer with a doctoral degree 
from that region. He can be reached at 
<mailto:mkamiar at fscj.edu>mkamiar at fscj.edu.

Sources cited:

CIA. The World Factbook. 

Fayazmanesh, S. “In Memory of August 19, 1953: 
What Kermit Roosevelt Didn’t Say.” www.counterpuch.org, August 18, 2003.

Gelvin, L. G. The Modern Middle East: A History. 
Oxford: Oxford University Press, 2005.

Kamiar, M.  “Country Name Calling: The Case of 
Iran vs. Persia.” The American Geographical 
Society’s Focus on Geography, Vol. 49, No. 4, Spring 2007, pp. 1-11.

Myers, K. “The Greatest 20th Century Beneficiary 
of Popular Mythology has been the Cad 
Churchill.”  Independence, Thursday September 03, 

Pollack, K. M. The Persian Puzzle: The Conflict 
Between Iran and America. New York: Random House, 2004.

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