D’Arcy Concession

Context

By 1900, even though the world was less mechanized than it is now, the importance of petroleum was generally recognized. Although gasoline-powered automobiles were uncommon and heavier-than-air aircraft had yet to be flown, kerosene for lighting, gasoline, and oil for lubricating engines were fairly common. The need for oil would grow in the coming years, though the extent to which the world would become dependent upon it was far from clear.

What was realized, however, was that petroleum was becoming an increasingly valuable commodity. The first successful oil well was drilled in Pennsylvania in 1859, and just over ten years later the oil- and gas-refining industry had become so profitable that John D. Rockefeller created the Standard Oil Company of Ohio. In a few years other companies would be formed; while some of them were short-lived, others, such as Royal Dutch Shell, would survive into the twenty-first century. Oil wells and refineries were being built in Baku, a territory in Azerbaijan that had once belonged to the kingdom of Persia, and expeditions for the exploration of oil were being conducted in ever-increasing numbers. The economic benefits of accessing and controlling oil sources were becoming obvious not only to those who wanted the oil but also to those who wanted revenues by making it accessible.

Precedent for the D'Arcy Concession had been established with the 1872 Reuter Concession, which granted Baron Julius de Reuter of Great Britain (remembered primarily for founding the Reuter News Agency) rights to mine for petroleum and other resources and to construct a railway in Persia. Then, in 1889, de Reuter received a second concession from the Persian government for mining rights, to include petroleum, for a period of sixty years, with Persia retaining 16 percent of the profits. The agreement would lapse after ten years if no discoveries were made, which is what happened.

In 1900 it was known that Persia had petroleum and natural gas resources, although Persia then imported most of its oil for commercial use from either Baku or the United States. Oil seeping to the surface provided petroleum that was used by the local population for caulking boats or as a fuel for lighting. Areas in northern Persia were said to be constantly burning, with flames fueled by natural gas. The commercial possibilities of selling rights to these resources were not lost on Persia's ruling class, especially its chief ruler, Mozaffar al-Din Shah Qajar, who spent a large amount of money on his personal amusement.

Because Persia did not have the technology to exploit the possibilities of extracting and selling oil, it looked to industrial nations to do so in return for financial consideration. The expectation that someone would pay a great deal for Persia's oil led officials in the Persian government to search for someone who would do so. In 1900 General Antoine Kitabgi, a high-ranking Persian official, approached the British diplomat Sir Henry Drummond Wolff (who had formerly been the British minister to Persia) to see if there was an investor interested in searching for oil in Persia. Within a month, Wolff notified Kitabgi that there was such a person, an investor who had made a fortune in Australian mines, William Knox D'Arcy. The successful effort to find someone who would find the oil and pay for it thus changed the history of Persia and the world.