Anglo-Persian Oil Company

Creation of APOC

On 14 April 1909, Burmah Oil created the Anglo-Persian Oil Company (APOC) as a subsidiary and also sold shares to the public.

Volume production of Persian oil products eventually started in 1913 from a refinery built at Abadan, for its first 50 years the largest oil refinery in the world (see Abadan Refinery). In 1913, shortly before World War I, APOC managers negotiated with a new customer, Winston Churchill, who was then First Lord of the Admiralty. Churchill, as a part of a three-year expansion program, sought to modernise Britain's Royal Navy by abandoning the use of coal-fired steamships and adopting oil as fuel for its ships instead. Although Britain had large reserves of coal, oil had the advantage of greater energy density, allowing a longer steaming range for a ship for the same bunker capacity. Furthermore, Churchill wanted to free Britain from its reliance on the Standard Oil and Shell oil companies. In exchange for secure oil supplies for its ships, the British government injected new capital into the company and, in doing so, acquired a controlling interest in APOC. The contract that was set up between the British Government and APOC was to hold for 20 years. The British government also became a de facto hidden power behind the oil company.

APOC took a 50% share in a new Turkish Petroleum Company (TPC) organised in 1912 by Calouste Gulbenkian to explore and develop oil resources in the Ottoman Empire. After a hiatus caused by World War I, it reformed and struck an immense gusher at Kirkuk, Mandatory Iraq in 1927, renaming itself the Iraq Petroleum Company.

In 1920, the APOC also acquired a northern oil concession that had been formally granted in 1916 to a former Russian subject, the Georgian Akaki Khoshtaria. To manage this new acquisition, the APOC formed a new subsidiary, the North Persia Oil Company. Persia, however, refused to accept the new company, giving rise to a lingering dispute over the northern Persian oil.

In 1923, oil was found at the Iraqi/Persian border in Naft Khana/Naft-i-Shah (now Diyala Province), which was considered a "transferred territory" along the Persia-Iraq border. The Khanaqin Oil Company was registered in London as an APOC subsidiary. The quantities henceforth produced in the field were rather insignificant. Naft Khana reverted to the Iraqi government in 1958 after failing to achieve a contractual obligation of 40,000 bbl/day.

During this period, Persian popular opposition to the D'Arcy oil concession and royalty terms whereby Persia only received 16% of net profits was widespread. Since industrial development and planning, as well as other fundamental reforms were predicated on oil revenues, the government's lack of control over the oil industry served to accentuate the Persian government's misgivings regarding the manner in which APOC conducted its affairs in Persia. Such a pervasive atmosphere of dissatisfaction seemed to suggest that a radical revision of the concession terms would be possible. Moreover, owing to the introduction of reforms that improved fiscal order in Persia, APOC's past practice of cutting off advances in oil royalties when its demands were not met had lost much of its sting.

In 1923, Burmah employed Winston Churchill as a paid consultant to lobby the British government to allow APOC to have exclusive rights to Persian oil resources, which were subsequently granted. In 1925, TPC received concession in the Mesopotamian oil resources from the Iraqi government under British mandate. TPC finally struck oil in Iraq on 14 October 1927. In 1928, the APOC's shareholding in TPC, which by now was named Iraq Petroleum Company (IPC), would be reduced to 23.75%; as the result of the changing geopolitics post Ottoman Empire break-up, and the Red Line Agreement. APOC was a 50% co-owner and responsible for the operation of the refinery completed in 1939 at the Haifa terminal of the IPC-owned Kirkuk-Haifa oil pipeline.

1933 agreement

According to Daniel Yergin, "By the end of April 1933, a new agreement was finally forged. The concession area was reduced by three-quarters. Persia was guaranteed a fixed royalty of four shillings per ton, which protected it against fluctuations in oil prices. At the same time, it would receive 20 percent of the company's worldwide profits that were actually distributed to shareholders above a certain minimum sum. In addition, a minimum annual payment of £750,000, irrespective of other developments, was guaranteed. The royalties for 1931 and 1932 were to be recalculated on the new basis, and the 'Persianization' of the workforce was to be accelerated. Meanwhile, the duration of the concession was extended from 1961 to 1993." By 1950, Abadan had become the world's largest refinery.

Subsidiary companies

Scottish Oils Ltd (controlling %) - was established by Anglo-Persian in 1919 by merging five Scottish oil shale companies (Young's Paraffin Light & Mineral Oil Company, Broxburn Oil Company, Pumpherston Shale Oil Company, Oakbank Oil Company and James Ross & Company Philpstoun Oil Works), was a producer of shale oil. Shale oil production in Scotland ceased in the early 1960s but there was an unsuccessful attempt to revive it in 1973. The company was wound up on 15 December 2010. The Scottish Oil Agency Ltd was a distributing and selling organisation of Scottish Oils Ltd. A Scottish Oil Agency rail tanker is preserved at the Museum of the Scottish Shale Oil Industry.

Aden Petroleum Refinery Ltd. - The $150 million 120,000bpd refinery began operations on August 4, 1954. Renamed BP Refinery (Aden) Ltd on June 1, 1956.

Australasian Petroleum Refinery Ltd. - Founded in January 1953. The 70,000bpd Kwinana refinery at Fremantle began operations in February 1955. Renamed BP Refinery (Kwinana) Ltd. on June 1, 1956

Australasian Petroleum Co Pty Ltd - was conducting exploration in Papua New Guinea in 1953.