THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY, AND THE ENDING OF BRITISH PARAMOUNTCY IN THE MIDDLE EAST: A BRITISH DEBACLE, AND THE BIRTH OF BRITISH PETROLEUM COMPANY LTD.

THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY, AND THE ENDING OF BRITISH PARAMOUNTCY IN THE MIDDLE EAST: A BRITISH DEBACLE, AND THE BIRTH OF BRITISH PETROLEUM COMPANY LTD.

The terms of the agreement were:

 

The agreement recognises Persian ownership of the oil industry, whereas under A. I. O. C. ‘ s 1933 concession title to the installations passed to the Persians in 1993. But the consortium will in practice have the use of the installations (without any rent) and the Agreement delegates to it a satisfactory measure of managerial powers. The Consortium’s tenure is for 25 years in the first instance, with options to renew for three 5-year periods (i.e. a total of 40 years and until 1994). Operations will begin over the whole of the former A. I. O. C. concession (with a few minor adjustments of border); but after the first 25 years the area will decrease at each renewal of option until, by the last 5- year period, the area covered by the Consortium’s operations will be about half what it was at the beginning. 1

All those companies mentioned already had big interests in the Middle East oil. They were the companies with a ready market for Iranian oil. The Times of London wrote:

Clearly, the British Government and the Consortium Companies’ negotiations have gone a long way to meet Persian aspirations without prejudicing the essential interests of the Companies, old and new, whose job it will be to work the complex arrangements for bringing back Persian oil to the world’s markets.2

On 6th August 1954, the Guardian wrote that the new agreement ‘should suit the interests both of Persia and of oil producers .’3 In regard to the question of Iran payin compensation to the Anglo-Iranian Oil Company, ‘a net interest-free payment of £25 million in ten equal annual instalments beginning on 1st January 1957,’4 would be made to the AIOC by Iran. The agreement was signed in 19th  September 1954 by the Iranian Minister of Finance and chief negotiator for Iran, Dr. Ali Amini, and on 21st September it was put before the Majlis. On 25th  September a joint Majlis-Senate oil commission was set up to study the agreement. On 10th October the debate in the Majlis began. On 21st October, by 113 votes to 5 with 10 abstaining the Majlis ratified the oil agreement. The bill passed the Senate on 28th October. After the signing by the Shah on 29th# October 1954, the bill became law. 5     

Back in July 1954, during the talks, the UK government had authorised an offer of £5million to Iran, ‘to further the conclusion of a satisfactory oil agreement and to promote political stability in Persia.’6After signing of the agreement in October 1954, Anthony Eden recommended a loan of £10 million to Iran, and said, ‘now that an oil agreement had been concluded large sterling earnings would accrue to Persia in a few year’s time and it was in our commercial interest to secure a foothold in the Persian market. 7Eden also went on to say ‘a tied loan of this kind would assist the recovery of our former share of the Persian market. 8  

        1. 1. Ibid.2. The Times, 6th August 1954, in ENAYAT, op. cit., p. 181.
          3. The Guardian, 6th August 1954, in ENAYAT, op. cit., p. 181.
          4. PRO, London, FO 371/110075, The General Correspondence of the Foreign Office, Anglo-Iranian Oil Company support to the stockholders, by Sir William Fraser, Chairman of the Company, Secret, October 1954.
          5. F. FESHARAKI, Development of Iranian Oil Industry: International and Domestic Aspects, (London: Praeger Publishers, 1976), Chapter 3.
          6. PRO, London, CAB 128/27 pt 2 CC (54) 56th Conclusions, Minute 7, p. 6.
          7. Ibid.
        2. 8. PRO, London, CAB 128/27 pt 2 CC (54) 55th Conclusions, Minute 6, p. 8.

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