THE PETROLEUM CULTURE
141
In 1906, the Concession Syndicate capped the northern fields
and moved the operation south where access was easier and prospects better. When the Shah was deposed and a new or Parliament
took over, the British and the Russians decided to section Persia.
As a result of this sectioning, the Russians would cover the north
and the British would cover the south. Oil started to flow in 1912
by means of a 138-mile pipeline to a refinery in Abadan on the
Shatt-al-Arab waterway between what would eventually become
the border of Iran and Iraq.
In order to deny the ever-increasing German navy the access
to this oil, the British government would buy 51% of the Abadan
refinery concern and, in addition, the British fleet was granted a
20-year contract for fuel oil. The first quasi-nationalized company
takeover had occurred.
World War I broke out in 1914, and from the beginning, it was a
war fought with land machines and aircrafts powered by petroleum
products. This served to increase the demand for crude oil and carried
the war to areas other than the Western Front. The demand for oil was
such that countries that had no interest in the war became embroiled
in the conflict as the right to oil were fought over with untold violence
and, not forgetting the obvious, political maneuvering (Yergin, 1991).
In the United States, the demand for automobiles was underway
(Setright, 2004) and the effect on gasoline demand was appreciable
leading to concern about depletion of the domestic supply of petroleum. As a result, a geological expedition was dispatched to Iraq
to determine if in fact there was oil. Drilling began in Baba Gurgar
near Kirkuk, and, within six months the drillers struck oil.
At this time, oil was seen as a truly rich resource, and between
World War I and World War Π, thoughts of nationalization spread.
In fact, the Shah of Persia seized the assets of the Anglo-Persian oil
Company in November 1932, leading him to seek a greater percentage of wealth from oil. This led to a new agreement in which Persia
was guaranteed a fixed royalty, regardless of market price of oil.
The 1930s depression had affected the Saud dynasty as it had most
of the world and as such the king of Saudi Arabia, founded on the
unification of various tribal territories by Muhammad Ibn Saud aided
by followers of Muhammad Ibn Abdul Wahab, also saw the potential wealth that lay being an oil industry. During a search for a viable
water source, several promising oil sites were noted, and, after oil was
discovered in Bahrain, Ibn Saud decided it would be in his country's
best interest to develop any oil fields that could be identified.
141
In 1906, the Concession Syndicate capped the northern fields
and moved the operation south where access was easier and prospects better. When the Shah was deposed and a new or Parliament
took over, the British and the Russians decided to section Persia.
As a result of this sectioning, the Russians would cover the north
and the British would cover the south. Oil started to flow in 1912
by means of a 138-mile pipeline to a refinery in Abadan on the
Shatt-al-Arab waterway between what would eventually become
the border of Iran and Iraq.
In order to deny the ever-increasing German navy the access
to this oil, the British government would buy 51% of the Abadan
refinery concern and, in addition, the British fleet was granted a
20-year contract for fuel oil. The first quasi-nationalized company
takeover had occurred.
World War I broke out in 1914, and from the beginning, it was a
war fought with land machines and aircrafts powered by petroleum
products. This served to increase the demand for crude oil and carried
the war to areas other than the Western Front. The demand for oil was
such that countries that had no interest in the war became embroiled
in the conflict as the right to oil were fought over with untold violence
and, not forgetting the obvious, political maneuvering (Yergin, 1991).
In the United States, the demand for automobiles was underway
(Setright, 2004) and the effect on gasoline demand was appreciable
leading to concern about depletion of the domestic supply of petroleum. As a result, a geological expedition was dispatched to Iraq
to determine if in fact there was oil. Drilling began in Baba Gurgar
near Kirkuk, and, within six months the drillers struck oil.
At this time, oil was seen as a truly rich resource, and between
World War I and World War Π, thoughts of nationalization spread.
In fact, the Shah of Persia seized the assets of the Anglo-Persian oil
Company in November 1932, leading him to seek a greater percentage of wealth from oil. This led to a new agreement in which Persia
was guaranteed a fixed royalty, regardless of market price of oil.
The 1930s depression had affected the Saud dynasty as it had most
of the world and as such the king of Saudi Arabia, founded on the
unification of various tribal territories by Muhammad Ibn Saud aided
by followers of Muhammad Ibn Abdul Wahab, also saw the potential wealth that lay being an oil industry. During a search for a viable
water source, several promising oil sites were noted, and, after oil was
discovered in Bahrain, Ibn Saud decided it would be in his country's
best interest to develop any oil fields that could be identified.