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Oil Is Discovered in Persia
The discovery of oil in Persia (modern-day Iran) in 1908 marked a significant turning point in the region's economic and political landscape. The process began when Moẓaffar od-Dīn Shāh, the Qājār Dynasty's ruler, sold exploration rights to William Knox D'Arcy, a wealthy Englishman. Despite initial challenges, including harsh weather and a lack of skilled labor, D'Arcy's venture bore fruit when oil was struck at Masjed Soleymān, leading to the establishment of the Anglo-Persian Oil Company in 1909. This discovery attracted British government interest, especially as the internal combustion engine gained importance, further integrating Persian oil into global markets.
The geopolitical implications of this find were profound, as both Russia and Britain sought to protect their interests in Persia during World War I. Subsequent developments included efforts by local leaders, such as Reza Khan, to negotiate better terms for oil profits, reflecting a growing nationalistic sentiment. This historical moment laid the foundation for Iran’s complex relationship with foreign powers, particularly regarding oil control, which continued to evolve through the 20th century, culminating in significant political upheaval, including the 1979 revolution. The discovery of oil thus not only transformed Persia's economy but also its political dynamics and international relations.
Full Article
DATE May 26, 1908
The discovery of oil in Persia by an Englishman who had purchased oil concession rights gave Great Britain control of Persian oil, making Persia of tremendous strategic importance during two world wars. The discovery also initiated the opening of the Middle East to oil exploration and development, making the region of vital importance to the world economy. Initial Western control of oil production produced an anti-imperialist reaction that remained for many decades.
LOCALE Masjed Soleymān, Persia (now Iran)
Key Figures
- William Knox D’Arcy (1849-1917), British entrepreneur
- Moẓaffar od-Dīn Shāh (1853-1907), Qājār shah, r. 1896-1907
- Reza Khan (1878-1944), nationalist and secular reformist shah of Iran, 1925-1941
- Mohammad Reza Shah Pahlavi (1919-1980), shah of Iran, 1941-1979
- Mohammad Mosaddeq (1880-1967), nationalistic prime minister of Iran, 1951-1953
- Sir Percy Sykes (1867-1945), British general in charge of protecting Persian oil fields during World War I
- George B. Reynolds (fl. early twentieth century), leader of D’Arcy’s oil drilling team
Summary of Event
During the last half of the nineteenth century, Persia (modern-day Iran) was of interest to Europeans mainly for its fine carpets and for whatever monopolies could be gained from monetary gifts to the corrupt shahs (emperors) of the Qājār Dynasty. By 1900, Russian interests controlled the five northern Persian provinces, while the British sphere was in the south and controlled monopolies for commodities such as tobacco. It was business as usual when Moẓaffar od-Dīn Shāh sold a concession to a wealthy Englishman, William Knox D’Arcy, who had made his fortune mining gold in Queensland, Australia. For ten thousand pounds, D’Arcy purchased the rights to explore, develop, and sell natural gas, petroleum, and asphalt in all of Persia, except for the five northern provinces controlled by Russia, for the next sixty years. After two years, D’Arcy was required to form a company and give the shah twenty thousand additional pounds and twenty thousand pounds in shares of the company’s stock. The shah was also to receive 16 percent of any profits from annual oil revenues.
The natural seepage of oil from the ground in Persia, which had been used for centuries to caulk boats and bind bricks, attracted European interest in the 1870’s as technology for oil drilling developed. Baron Julius de Reuter (founder of Reuters News Agency) made two unsuccessful efforts to locate oil, and in the early 1890’s a French geologist surveyed western Persia and published a scientific paper on the region’s oil-producing potential. These efforts sparked D’Arcy’s interests and resulted in his 1901 purchase of the shah’s concession. That year, D’Arcy hired George B. Reynolds, one of the few Englishmen with experience in oil exploration, and sent him to find oil fields in western Persia.
From 1901 to 1905, Reynolds drilled for oil without success. Harsh weather conditions, difficult terrain, and the shortage of skilled labor slowed progress. Running low on capital, D’Arcy signed an agreement with the Burmah Oil Company, a British corporation, to gain the funding necessary to continue exploration. Reynolds began drilling in southern Iraq, but through 1906 and 1907 he continued to lose money. The venture was close to collapse when, at 4:00 P.M. on May 26, 1908, oil began to gush over the top of oil rig number one at Masjed Soleymān, rising to a height of fifty feet above the rig. Two more wells were sunk, with equally productive results. The first major oil strike in the Middle East had been made. Today, a small outdoor museum preserves what is known as Well Number One, which still retains its original rig, boiler, and pump.
In 1909, the Anglo-Persian Oil Company was founded. D’Arcy led the company, and by the time of his death in 1917 he had made a massive fortune, despite the fact that he never set foot in Persia and operated only through his agents. The company began construction in October, 1909, and by 1911 the number of employees had risen to twenty-five hundred. The export of oil began in 1912, and by 1914, thirty oil wells had been drilled at Masjed Soleymān....
....MUCH MORE
Here's BP's version of their origin story.
And at Encyclopedia Iranica.
