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Oil Age in Iran

(Sunday, December 30, 2018) 02:59

All across the world, Iran is known to be a country sitting atop rich oil and gas reserves. Since more than a century ago when oil was discovered, Iran has turned into one of the major players in the industry. That caused Iran myriads problems, but Iran has since been an influential state in the oil market.

Iranians were familiar with oil and gas since ancient time. Archeologists have unearthed artifacts proving that Persians knew bitumen and its use. During the Elamite civilization, famous stamps were made from natural bitumen. Furthermore, bitumen was used for coating boats and coffins, and in the manufacturing of some vessels. These are just examples of use of bitumen, a derivative of oil, in ancient Persia, today known as Iran.


The use of oil, bitumen and gas in the following civilizations and particularly for religious purposes and the use of gas as fuel in ancient fire temples are among signs of the familiarity of ancient Persians with petroleum and its derivatives.


When we add military purposes and take into consideration oil-powered cannon ships of the Persian Army that the paramount significance of oil and its derivatives in ancient Persia and following periods could be realized.


Despite ancient Persians’ familiarity with oil, it was centuries later that Iran and the entire world appreciated the real value of this remarkable fluid.


The West was looking for an alternative to coal in order to speed up trend of its industrial revolution. To that end, it studied various spots in the world. One of them was Iran. British geologist, naturalist, explorer and archaeological excavator William Kennett Loftus visited southwest Iran in the 1800s and published his observations in Europe.


In his article about the geological specifications of Turco-Persian border areas, Loftus spoke about petroleum seeps.


**Financial Woes


Petroleum seeps in southwestern Iran date from long time ago. Petroleum seeps are quite common in many areas of the world, and have been exploited by mankind since Paleolithic times. Natural products associated with these seeps include bitumen, pitch, asphalt and tar. In locations where seeps of natural gas are sufficiently large, natural "eternal flames" often persist. The occurrence of surface petroleum was often included in location names that developed; these locations are also associated with early oil and gas exploitation, as well as scientific and technological developments, which have grown into the petroleum industry.


Loftus’s article on petroleum seeps encouraged Western governments to test the likelihood of oil and gas in Iran. The opportunity for that purpose was created during the Qajar era. In 1872, Baron Julius Reuter won the first ever oil concession from the Government of Persia for exploiting mine and reservoirs. But the concession was scrapped very soon under pressure from Russia. One decade later, the Europeans made a fresh try to dominate Iran’s oil. In 1883, Dutch Albert Hutsen won a concession to extract oil in Iran in Dalaki. He had established a company to carry out exploration operations in that area. But no acceptable results were achieved and he had to stop work. His company went bankrupt and he sold it shares.


Reuter once again jumped to the fray in 1889 to explore oil. He established a bank and purchased the shares of Hutsen’s company. Since the only authorized zone for exploration was southern coasts, Reuter focused on Qeshm Island for oil exploration.


A 700-foot well was drilled in Qeshm Island, but no oil was found. After this failure, the exploration operation was halted in 1894. Everyone was frustrated with failed oil exploration operations, ranging from Western investors and economic planners to Qajar court and government officials who were grappling with financial difficulties.


Iran was facing a financial turmoil at that time and the government desperately needed money. The reason for such financial needs was the Qajar king’s luxurious lifestyle.


Two years prior to the time that Reuter stopped his operation in Iran, French archeologist and geologist Jacques de Morgan travelled to Iran and visited Qasr-e Shirin and southwestern Iran. He published his travelogue in a Paris paper, raising the possibility of oil reservoirs in western Iran.


When Antoine Ketabchi (of Georgian or Armenian origin), who was head of Iran’s Customs, was tasked with travelling overseas to find investor for Iran’s oil, he had basic knowledge of the existence of oil in Iran.


Ketabchi was supposed to inaugurate an exhibition in Paris, but his meetings and talks showed that he was looking for someone to invest in Iran’s oil. Ketabchi met with Reuter’s secretary whom he knew during Reuter’s presence in Iran. He also met with de Morgan who was assured oil existed in Iran.


Ketabchi, along with Morgan and de Reuter’s secretary, met with the British ambassador to Paris. The ambassador introduced a millionaire whom he knew quite well. He was William Knox D’Arcy.


D’Arcy was born in England in 1840. He later moved to Australia where he was a lawyer. He was also interested in betting in racing matches.


D’Arcy always took risks. Before coming to Iran, he took the risk of purchasing an abandoned gold mine in Australia. Later on, it was known that the mine was still rich in gold.


Gold mining revenue made D’Arcy a rich man. He returned to London as a millionaire. D’Arcy was looking for a place to invest his money in. He warmly welcomed the offer to come and invest in Iran’s oil.


He first sent his secretary to Iran in March 1901 to study conditions for investment. His meeting with the Shah of Iran came to fruition very soon. Some sources say D’Arcy had bribed some of Shah’s influential associates. The concession was awarded to D’Arcy in the same year for oil exploration. Under the concession, D’Arcy was authorized to explore, recover and export oil from Iran over a 60-year period. The authorized zone for that purpose was 480,000 square miles in southern Iran in a bid not to face opposition from Russia, the northern neighbor.


Courtesy of Iran Petroleum

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