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Iran Oil and Two World Wars

 Iran Oil and Two World Wars

Wednesday، 24 October 2018 | Article Rating

TEHRAN (Shana) -- Barely had two years passed since the construction of an oil refinery in the Iranian city of Abadan when World War I broke out. Later on, documents revealed that a major objective pursued in the bloody conflict was dominance on oil and gas resources all across the globe.


The Triple Entente treaty was reached among Britain, France and Russia on how to divide global oil resources after the end of the war. French politician Georges Clemenceau had said that one drop of oil would be equal in value with one drop of blood. British politician Lord George Nathaniel Curzon had predicted that the Allies would go through oil to reach victory.

The involvement of Turkey's Ottoman Empire in the global war posed a serious threat to the Anglo-Iranian Oil Company (AIOC). When in November 1914 a war erupted between Britain and the Ottomans, it was announced that Iran's oil facilities would be within the reach of the Turks. German Consul Wilhelm Wassmuss, who was based in Bushehr, had already identified oil-rich zones in Iran. He had good information about the extension of Masjed Soleyman-Abadan oil pipeline. Moreover, he had once met with the head of Masjed Soleyman. On February 6, 1915, Wassmuss incited local tribesmen to explode the pipeline. AIOC stores were plundered and communications lines were cut. That might be the most important and the only WWI-era even in Iran to result from the fact that the country sat atop huge oil reserves. At the beginning of WWI, roughly 25,000 tonnes a month of oil and petroleum products was being exported from Abadan. That amount was so important for Britain's Marines to urge the British government to take action.

British forces were deployed in Basra while Indian soldiers were deployed in Khuzestan. The Indians' presence in Khuzestan produced cultural and social impacts in addition to military issues. Khuzestan was dotted with military barracks and camps which housed Indian troops. Such titles as "Sahib" became common in those areas.

In different areas of Khuzestan, including Masjed Soleyman, the Indians were housed. The Allied forces' dependence on oil and the significance of oil facilities for them led to the expansion of AIOC activities in Iran from 1915 to 1919. In the In the meantime, a paved road was built connecting Masjed Soleyman to Darkhazineh. New transportation means like passenger cars and truck were used. Masjed Soleyman's power generation plant was developed and the capacity of the Abadan refinery was enhanced with the construction of a new pipeline.

Oil extraction and export rose from 274,000 tonnes a year in 1914 to 1.385 million tonnes in 1920. Iran's oil flow was serving as a bridge to victory. Britain and its allies did spare no efforts to protect this valuable source of energy.

The end of the war resulted in the development of petroleum industry in Iran. AIOC recorded progress to the extent that its Board of Directors managed to sell three million bills printed for the company's assets. At the same time, conflicts emerged between Iran and AIOC, which resulted in the revision of terms of the D'Arcy Concession and the signature of the 1919 Agreement. In the years following the war, activities were developing. In late 1992, the Abadan refinery had brought its annual treatment capacity to three million tonnes. In 1924, a small railway was built to connect Darkhazineh and Masjed Soleyman. That helped circumvent mountainous areas. New exploration work was under way. In 1928, huge oil reserves were discovered in Haftkal. In 1930 only, about one million tonnes of oil was extracted from that area. In the same year, the Abadan refinery's treatment capacity reached five million tonnes. From WWI to WWII, important political events transpired Iran. The transition of power from the Qajar to the Pahlavi dynasty and the new Shah's efforts for empowering the central government forced the company’s administrators to resort to government forces in order to protect their interests. The termination of the D'Arcy Concession and the 1933 Treaty were among important events which happened between the two global wars. The world was bracing for new events which would not spare Iran. When WWII broke out, Iran's oil proved its significance and influence in international relations for a second time. The invasion of Iran by the British forces and their allies in September 1941 destabilized Iran.

The main objective sought by the Allied forces in their invasion of Iran was to deliver ammunitions to Russia; however, it may not be denied that the Allies were concerned with safeguarding Iran's petroleum industry. The conditions changed drastically after Japan intervened in the war because the Japanese managed to free Indonesia and Burma, which were both major resources of hydrocarbon for the Allies. Then, Iran became the unique source of revenue for the Allies. Not long before the breakout of WWII, a facility that had been built to produce jet fuel was installed at the Abadan refinery.

The factory started work in 1940, but two years later it became clear that it would not supply enough gasoline for the warring Allied forces. Therefore, during the war new sections were added to the refinery until in 1944 the refinery was able to produce one million tonnes a year of jet fuel, which was a record in the world.

From the second year of the war it became known that Iran had to supply petroleum products to the Allies. Therefore, development of AIOC was restarted. The British and American governments decided to send necessary equipment to Iran. That marked the start of the US's silent presence in global politics and economy, which resulted in new conditions for the entire world. Extraction from new reservoirs including in Aghajari started to provide kerosene to the Allies. During the November 1943 conference in Tehran between Joseph Stalin, Franklin Roosevelt and Winston Churchill, Stalin proposed negotiations about the extraction and distribution of Middle East oil in the post-war era. Roosevelt and Churchill opposed, saying the issue had to be discussed later on. In fact, Russia was seeking to plunder Middle East oil, particularly Iran's oil after the war. As soon as the war ended, the Americans also eyed Iran's oil. Sinclair Oil Corporation and Standard Vacuum Oil Company came to Iran in the hope of winning oil concessions.

The downfall of Reza Shah and the transition of power to his son were important events during that period of Iran's history, which resulted in more events in Iran's interaction with AIOC. Development of oil industry in Iran continued after the war. In 1946, Iran was recovering 19.19 million tonnes of oil, which increased to 31 million tonnes in 1950. The reason for such increase in oil production resulted from new operations in Gachsaran, Aghajari, Omidieh, Lali, Haftkal, Ahvaz and other oil-rich regions.

Post-WWII world was different and changes in global diplomacy were leaving their impact on Iran. During the two world wars, Iran's oil helped the Allies reach victory. That is why Iran's oil industry development continued. Furthermore, after the war, a new wave of nationalism spread across the world. The emergence of the United States, as a new power, had changed traditional political and economic ties. Everywhere, there was talk of nationalization of petroleum industry.

Pasargad Energy Development Co. (PEDC) is an independent energy company based in Iran. PEDC is an integrated energy company whose activities span the entire value chain including exploration, production, refining, petrochemicals marketing, power generation & renewables as well as new high-tech venture capitalizing. Our headquarter is located in Tehran. PEDC is present across the Iranian continental shelf and international market through its subsidiaries. We create value for our shareholders through active investment, high-level monitoring of our projects, building world-class partnership and managing our risks effectively and making balanced portfolio. Meantime, we contribute to the sustainable development of the energy sector and communities in our country. PEDC’s competitiveness relies upon our values-based performance culture, with a strong commitment to transparency, cooperation and continuous operational improvement. As a wholly owned subsidiary of the Pasargad Financial Group, with Pasargad Bank being a distinctive shareholder, we owe our success to our experience, management knowledge and strong local/international partnerships since 2008. PEDC is committed to maintaining sustainability and being recognized as the strategic partner of choice in Iran’s energy and petrochemical sector.​

  • Iran Oil and Two World Wars
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