Journal of South Asian and Middle Eastern Studies

18 Journal of South Asian and Middle Eastern Studies Vol. XXXIII, No. 2, Winter 2010 D’Arcy’s Oil Concession of 1901: Oil Independence, Foreign Influence and Characters Involved Hesamedin Navabi* At the turn of the 20th century, Britain was heavily dependent on foreign oil. American companies supplied two third of the British oil imports and Shell, registered in London in 1897, was dependent on Russian import. Standard Oil Trust (later on Exxon) established companies in France, Britain and Germany in 1890 and the Anglo-American Oil Company had been formed to market oil in the British Isles.1 By this time, mineral oil had assumed a vital role for Western industry. American domestic consumption rose rapidly from few thousand barrels in 1859 to 64,000,000 barrels in 1900.2 In the late 19th century, Russia produced 51 per cent of the world oil production as opposed to 43 per cent by America. Technical advances, however, passed from Russia to America and it is true to say that by the turn of the century oil was mainly an American industry. The world-wide American price-cutting of 1896 was a matter of life or death for many European oil companies.3 At this time, Europe was the scene of the most intense oil competition. The control exerted on oil market by Exxon and Shell was such that even *Hesamedin Navabi, PhD,Research Fellow, School of Government and International Affairs. University of Durham, England. Research interests: Development of Iranian Nationalism in the 20th century, Inter-Allied Relationship in Iran in the 1940’s, the Caspian Sea Oil. Specialised in Qajar Concessions and the origins of the Anglo-Iranian Oil Dispute of 1950-1953. 1 www.virginia.edu/igpr/apag/apagoilhistory.html 2 Petroleum Handbook, Amsterdam : Elsevier, 6th ed, 1983, Appendix. 3 B S McBeth, British Oil Policy 1919-1939, London : Frank Cass, 1985, pp 3. Deterdinge's statement quoted in R Hewins, Mr Five Percent : The Biography of Calouste Gulbenkian, London: Huthinson, 1957, pp 62. 19 in 1919, Sir Wilfred Stokes commented that all aspects of industry had been controlled by these two companies.4 Having been heavily dependent on foreign oil, Britain also expected an enormous rise in oil consumption for battleships needed to be modernised due to the emergence of a German naval power.5 In recognising the importance of oil for Britain, Scottish businessmen were perhaps 20 years ahead of politicians when they formed the Burmah Oil Company in 1886 to explore oil in upper Burmah.6 Apart from that, not much oil had been found within the borders of the British Empire. Oil independence was in the process of becoming a policy as British authorities considered over-dependence on American oil unsafe. The search for oil had been intensified through Anglo-German rivalry. It is not, therefore, surprising to learn that in 1890 Sir Henry Wolff, British Ambassador to Iran, submitted a misleading report to Lord Salisbury claiming that Baku oil fields were in the process of exhaustion whereas oil fields of Iran promised a good future.7 Existence of natural oil seepages gave Iran and Mesopotamia special places amongst areas known to have oil reserves. German influence was, however, too strong to allow British capitalists interfere in Mesopotamia. German authorities pursued a policy of peaceful economic penetration in the Middle East for the very obvious reason that by the time German Reich was established in 1871, there was nothing left in the area to be claimed. Britain, France and Russia had already distributed the area between themselves when they established empires. This was still the case during German orient founding years between 1884 and 1914 when Germany became a small colonial power in the East and West Africa.8 In 1888, Germany was most anxious to obtain mining concessions for the Anatolian Railway. The Anglo-German rivalry reached its peak 10 years later when the Kaiser paid a state visit to Constantinople. The pro-German sentiment was high and Ottoman Sultan, like Iranian statesmen, played the game of using one great power as a foil against another, in order to prevent partition of his empire. The main point, as far as Britain was concerned, 4...