BP

The third largest of the six supermajors, British Petroleum (BP) originated when the last Shah of Persia (before that country became known as Iran) granted an oil concession to British land speculator William Knox D'Arcy in 1901. Fittingly, the company that has been so intertwined with modern Middle Eastern history was founded to drill for oil in the first major oil discovery in the Middle East. In the century since, it has expanded to open productions in 22 countries.

The supermajors are the six oil companies that rose to the top of the industry in the 1990s, in the flurry of mergers following the decline in the price of oil. The older term Big Oil, used in reference to the cooperative behavior and lobbying of oil companies, is often used now to refer specifically to the supermajors. Each supermajor has revenues in the hundreds of billions of dollars, benefiting from vast stores of petroleum products and natural gas and oil resources. BP currently employs 115,000 workers, with revenues of $274 billion.

D'Arcy found oil in 1908, making the first major oil discovery in the Middle East, and founded the Anglo-Persian Oil Company in order to pursue his claim. The refinery built in Abadan was, until the 1960s, the largest in the world. Nearly as soon as it began operations, the British government “partially nationalized” the company in order to guarantee an oil supply for its ships, which proved even more critical when World War I broke out.

When the D'Arcy concession was first granted, there was no way of knowing if oil would ever be found—indeed, the engineer who eventually found [Page 175]it had been instructed to give up hope, and told that the operation was going to be canceled, but by delaying his response for a matter of weeks he managed to pull the company's fat out of the fire. When the company thus became such an extraordinary success, and the nature of oil wealth became clear to the Persian government, pressure mounted to renegotiate terms. This was a critical time in the nation's history—not long after World War I, in 1925, Reza Khan overthrew the Qatar Dynasty and became Shah, instituting a significant effort at modernization that included railroad construction and nationwide public education.

It was the new Shah's request that the rest of the world refer to once-Persia as Iran, and the Anglo-Persian Oil Company became the Anglo-Iranian Oil Company (AIOC). New terms were negotiated slowly, complicated by the global economic destabi-lization of the Great Depression. Though the rate of royalty paid to the Iranian government increased, the AIOC's accounting practices saw that the amount paid remained largely the same. Nationalization helped the company survive, with the British government making decisions the private sector could not have—such as refusing to acknowledge the Iranian government's decision to rescind the D'Arcy concession.

Though the Shah was the guiding force behind Iran's demands for better treatment under the agreement, he was still broadly pro-British, and sought to preserve a good relationship with his various European and western allies. Unfortunately, since those connections included both the British and the Germans, as the world approached the precipice of World War II he was forced to make a decision. He abdicated ruler-ship of Iran in favor of his son, Reza Pahlavi, rather than lose British support. However, as far as appeasing British interests, this backfired. Dr. Mohammed Mossadegh was elected prime minister in 1951, and nationalized Iranian oil, a move with widespread approval in the country because of AIOC's refusal to split profits 50–50 with Iran, as was done in Saudi Arabia. Both the communist party and the Islamic fundamentalists supported nationalization as well.

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