Will Persia Bite the Feeding Hand?
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British Enterprise and Vast Capital Expenditure have been Involved in Discovering and Bringing Oil to the Surface in Persia. Everything has been Done by the Oil Company to Maintain Cordial Relationships with the Persian Government and Generous Royalties Have
Asks L. J. COTTON, M .i.R.T.E.
Promoted the Prosperity of the Country
pERSIA was first in the news in 559 B.C. when Cyrus was crowned monarch. At that time, nothing was known of the vast oil resources below the crust of the earth and many leaves were turned in the pages of Persian history before Mr. D'Arcy obtained a concession in 1901 from the Persian Government "to search for, obtain, exploit, develop, render suitable for trade, carry away and sell natural gas, petroleum, asphalt and ozokerite throughout the whole of the Persian
Empire, except certain areas in the north." .
Transport of personnel and equipment was difficult and heavy expenditure had been incurred by 1908, when the first important oilfield was discovered in the hills of Khuzistan. In consequence of this discovery, the AngloPersian Oil Co., renamed the Anglo-Iranian Oil Co in 1935, was formed to operate the rights of Mr. D'Arcy's original concession. Abadan, a port on the Persian Gulf, was selected for refining the crude oil and the first pipeline was laid from the oilfield to the port in 1911.
During the First World War, the British Admiralty entered into a long-term contract with the A.P.O.C. for fuel oil, and the Navy and the British Government simultaneously invested €2m. in the company. The development of an oilfield into a large-scale commercial enterprise is costly, and between 1921 and 1923 the capital expenditure amounted to £30m.
Cordial Relationships
No expense was spared to increase output and an outstanding contribution was the development of plant in Abadan which, in 1944, supplied a million tons of 100-octane spirit for the Allied forces, meeting a large proportion of the total requirements of the R.A.F. and U.S.A.A.F. in the Middle East and Far East theatres of war, besides providing large quantities for Soviet Russia. The Abadan refinery is the largest in the world, having a capacity of 20 million tons per annum. .
Persia has profited by the expansion of the oil company. It has been paid a generous royalty for all crude oil brought to the surface, and a large proportion of its population has been employed by the organization. It was realized that from the ear3iest days the prosperity of A.I.O.C. depended upon the maintenance of close and cordial relations with the Government and people of Persia.
Everything was done to ensure that it was not only a profit-making machine, but that it contributed to the material and social progress of the country. Skilled workmen were trained in the various processes involved in the production, refining and.distribution of petroleum, and facilities were provided for technical instruction. Large-scale assistance was given to the Iranian educational and municipal authorities in the working areas and picked students were sent to English universities for further scientific education. Elaborate social welfare, recreation and medical facilities were provided.
Persia is again in the news, This time it threatens, under the cloak of nationalization, to bite the helping hand by absorbing the experience and equipment of the oil company. The thin end of the wedge was inserted a few years ago, when the Persian Government took control of labour employed by the oil company and foreign labour contracts were not renewed upon expiry. This was embarrassing to the oil company and created certain difficulties in filling important posts at short notice.
What would the nationalization of Persian oil production mean to Britain? First, the loss of one of the richest oil-bearing areas in the Middle East, coupled with the products of the largest refinery. This alone is a serious prospect to a country striving to recover from the effects of war and counting every dollar earned by the oil sold in various forms to America and elsewhere.
Loss to British Manufacturers
The patriotic oil company purchased expensive oilfield equipment and made contracts with British manufacturers to supply vehicles for multifarious needs. Many British car and commercial-vehicle manufacturers, together with the associated bodybuilding concerns, have work of some description for use in Persia. Our commercial-vehicle makers have profited in recent years by experience gained in the operation of their products in the most difficult areas of the country.
Where would Persia buy vehicles and equipment? Oil, in 1951, is currency, and Persia might not choose to sell all the oil to Britain, and might, therefore, elect to purchase vehicles and equipment from other sources.
If Persia succeeds in nationalizing the oil industry, it will be a serious blow to Britain. What one country can do, so can another, and nationalization could easily spread to neighbouring oil-bearing countries.
An A.I.O.C. asset which would escape nationalization is the tanker fleet of 140 vessels totalling 24 million tons. These are mostly new vessels built to replace those sunk during the war. Persia would find difficulty in disposing of its oil to the western world, because 95 per cent. of the fuel is exported and, apart from a fleet of road tankers, internal transport is practically negligible.
Difficulties in Distribution There is one main road in the north, the Aid-to-Russia route built by the Allies during the war, but apart from 'this, new roads would be required before any quantity of fuel could be transported overland. After I visited Persia two years ago, I commented on the neglect of road maintenance. Apart from the work done by the A.I.O.C., little effort is made by the Persians to keep either the surface or foundations in good repair.
A solution of the tanker problem would be to provide overland pipelines, but here there would be an overlap on the operations in Iraq, which could supply most of Persia's important bordering countries, apart from Soviet Russia. The Elburz Mountains, where winter temperatures below zero are common for long periods, would militate against piping the oil to the Caspian Sea, where tankers from other countries might be impressed to distribute Persian oil.