The Anglo-Persian Oil Company (APOC) was founded in 1908 following the discovery of a large oil field in Masjed Soleiman, Iran. It was the first company to extract petroleum from the South Asian country of Iran. In 1935 APOC was renamed the Anglo-Iranian Oil Company (AIOC) and in 1954 it became the British Petroleum Company (BP), one of the antecedents of the modern BP plc.

The D'Arcy Oil Concession[link]

Exploration and discovery[link]

In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with the Shah Mozzafar al-Din Shah Qajar of Persia. He assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange the Shah received £20,000 (£1.6 million today^[1]), an equal amount in shares of D'Arcy's company, and a promise of 16% of future profits.^[2]

D'Arcy hired geologist George Bernard Reynolds to do the prospecting in the Iranian desert. Conditions were extremely harsh: "small pox raged, bandits and warlords ruled, water was all but unavailable, and temperatures often soared past 50°C".^[3] After several years of prospecting, D'Arcy's fortune dwindled away and he was forced to sell most of his rights to a Glasgow-based syndicate, the Burmah Oil Company.

By 1908 having sunk more than £500,000 into their Persian venture and found no oil, D'Arcy and Burmah decided to abandon exploration in Iran. In early May 1908 they sent Reynolds a telegram telling him that they had run out of money and ordering him to "cease work, dismiss the staff, dismantle anything worth the cost of transporting to the coast for re-shipment, and come home." Reynolds delayed following these orders and in a stroke of luck, struck oil shortly after on May 26, 1908.^[4]

Creation of APOC[link]

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Burmah Oil Company Ltd. created the Anglo-Persian Oil Company (APOC) as a subsidiary and also sold shares to the public.^[5]

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 modernize Britains navy by abandoning the use of coal. Furthermore, Churchill wanted to free Britain from their reliance on the Standard Oil, and Royal Dutch-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.^[6]

APOC took a 50% share in a new Turkish Petroleum Company organized 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, 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, but the Iranians refused to accept the new company, giving rise to a lingering dispute over the northern Iranian oil. ^[7]

During this period, Iranian popular opposition to the D'Arcy oil concession and royalty terms whereby Iran only received 16 percent 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 Iranian Government's misgivings regarding the manner in which APOC conducted its affairs in Iran. 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 Iran, APOC's past practice of cutting off advances in oil royalties when its demands were not met had lost much of its sting.

Renegotiating of terms by Iran[link]

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The attempt to revise the terms of the oil concession on a more favourable basis for Iran led to protracted negotiations that took place in Tehran, Lausanne, London and Paris between Abdolhossein Teymourtash, Iran's Minister of Court 1925-32 and its nominal Minister of Foreign Affairs, and the Chairman of APOC, John Cadman, spanned 1928-32. The overarching argument for revisiting the terms of the D'Arcy Agreement on the Iranian side was that its national wealth was being squandered by a concession that was granted in 1901 by a previous non-constitutional government forced to agree to inequitable terms under duress. In order to buttress his position in talks with the British, Teymourtash retained the expertise of French and Swiss oil experts.

Iran demanded a revision of the terms whereby Iran would be granted 25% of APOC's total shares. To counter British objections, Teymourtash would state that "if this had been a new concession, the Persian Government would have insisted not on 25 percent but on a 50-50 basis. Teymourtash also asked for a minimum guaranteed interest of 12.5% on dividends from the shares of the company, plus 2s per ton of oil produced. In addition, he specified that the company was to reduce the existing area of the concession. The intent behind reducing the area of the concession was to push APOC operations to the southwest of the country so as to make it possible for Iran to approach and lure non-British oil companies to develop oilfields on more generous terms in areas not part of APOC's area of concession.

Apart from demanding a more equitable share of the profits of the Company, an issue that did not escape Teymourtash's attention was that the flow of transactions between APOC and its various subsidiaries deprived Iran of gaining an accurate and reliable appreciation of APOC's full profits. As such, he demanded that the company register itself in Tehran as well as London, and the exclusive rights of transportation of the oil be cancelled. In fact in the midst of the negotiations in 1930, the Iranian National Consultative Assembly approved a bill whereby APOC was required to pay a 4 percent tax on its prospective profits earned in Iran.

In the face of British prevarication, Iran decided to demonstrate Iranian misgivings by upping the ante. Apart from encouraging the press to draft editorials criticizing the terms of the D'Arcy concession, a delegation consisting of Reza Shah and other political notables and journalists was dispatched to the vicinity of the oilfields to inaugurate a newly constructed road, with instructions that they refrain from visiting the oil installation in an explicit show of protest.

In 1931, Teymourtash who was travelling to Europe to enroll Crown Prince Mohammed Reza Pahlavi at a Swiss boarding school, decided to use the occasion to attempt to conclude the negotiations. According to Cadman, Teymourtash worked feverishly and diligently to resolve all outstanding issues, and succeeded in securing an agreement in principle:

He came to London, he wined and he dined and he spent day and night in negotiating. Many interviews took place. He married his daughter, he put his boy to school [Harrow], he met the Secretary of State for Foreign Affairs, a change took place in our government, and in the midst of all this maze of activities we reached a tentative agreement on the principles to be included in the new document, leaving certain figures and the lump sum to be settled at a later date.

However, while Teymourtash likely believed that after four years of exhaustive and detailed discussions, he had succeeded in navigating the negotiations on the road to a conclusive end; the latest negotiations in London were to prove nothing more than a cul de sac.

Matters came to a head in 1931, when the combined effects of overabundant oil supplies on the global markets and the economic destabilization of the Depression, led to fluctuations which drastically reduced annual payments accruing to Iran to a fifth of what it had received in the previous year. In that year APOC informed the Iranian government that its royalties for the year would amount to a mere £366,782 while in the same period the company's income taxes paid to the British Government amounted to approximately £1,000,000. Furthermore, while the company's profits declined 36 percent for the year, the revenues paid to the Iranian government pursuant to the company's accounting practices decreased by 76 percent. Such a precipitous drop in royalties appeared to confirm suspicions of bad faith, and Teymourtash indicated that the parties would have to revisit negotiations.

However, Reza Shah was soon to assert his authority by dramatically inserting himself into the negotiations. The Monarch attended a meeting of the Council of Ministers in November 1932, and after publicly rebuking Teymourtash for his failure to secure an agreement, dictated a letter to cabinet cancelling the D'Arcy Agreement. The Iranian Government notified APOC that it would cease further negotiations and demanded cancellation of the D'Arcy concession. Rejecting the cancellation, the British government espoused the claim on behalf of APOC and brought the dispute before the Permanent Court of International Justice at the Hague, asserting that it regarded itself "as entitled to take all such measures as the situation may demand for the Company's protection." At this point, Hassan Taqizadeh, the new Iranian Minister entrusted with the task of assuming responsibility for the oil dossier, was to intimate to the British the cancellation was simply meant to expedite negotiations and that it would constitute political suicide for Iran to withdraw from negotiations.

After the dispute between the two countries was taken up at the Hague, the Czech Foreign Minister who was appointed mediator put the matter into abeyance to allow the contending parties to attempt to resolve the dispute. Ironically, Reza Shah who had stood firm in demanding the abolishment of the D'Arcy concession, suddenly acquiesced to British demands, much to the chagrin and disappointment of his Cabinet. A new agreement with the Anglo-Persian Oil Company was agreed to after Cadman visited Iran in April 1933 and was granted a private audience with the Shah. A new agreement was ratified by the National Consultative Assembly on May 28, 1933 and received Royal assent the following day.

1933 agreement[link]

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The terms of the new agreement provided for a new 60-year concession. The Agreement reduced the area under APOC control to 100,000 square miles (260,000 km²), required annual payments in lieu of Iranian income tax, as well as guaranteeing a minimum annual payment of £750,000 to the Iranian government. These provisions, while appearing favourable, are widely agreed to have represented a squandered opportunity for the Iranian government. The agreement extended the life of the D'Arcy concession by an additional 32 years, negligently allowed APOC to select the best 100,000 square miles (260,000 km²), the minimum guaranteed royalty was far too modest, and in a fit of carelessness the company's operations were exempted from import or customs duties. Finally, Iran surrendered its right to annul the agreement, and settled on a complex and tediously elaborate arbitration process to settle any disagreements that would arise.

The Anglo-Persian Oil Company continued its large Persian operations although it changed its name to the AIOC in 1935. By 1950 Abadan had become the world's largest refinery. In spite of diversification the AIOC still relied heavily on its Iranian oil fields for three-quarters of its supplies, and controlled all oil in Iran.

Nationalisation and coup[link]

Discontent in Iran[link]

By 1951 Iranian support for nationalisation of the AIOC was intense. Grievances included the small fraction of revenues Iran received. In 1947, for example, AIOC reported after-tax profits of £40 million ($112 million) - and gave Iran just £7 million.^[8]

Conditions for Iranian oil workers and their families were very bad. The director of Iran's Petroleum Institute wrote that

Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper City, without running water or electricity, ... In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep, and ... when the rains subsided, clouds of nipping, small-winged flies rose from the stagnant water to fill the nostrils .... Summer was worse. ... The heat was torrid ... sticky and unrelenting - while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. ... In every crevice hung the foul, sulfurous stench of burning oil .... in Kaghazad there was nothing - not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town, ... were missing here. The unpaved alleyways were emporiums for rats.^[9]

Under the 1933 agreement with Reza Shah, AIOC had promised to give laborers better pay and more chance for advancement, build schools, hospitals, roads and telephone system. It had not done so.^[8]

In May 1949 Britain had offered a "Supplemental oil agreement" which guaranteed royalty payments would not drop below £4 million, reduced the area in which it would be allowed to drill, and promised more Iranians would be trained for administrative positions." The agreement, however, gave Iran no "greater voice in company's management" or right to audit the company books. When the Iranian Prime Minister tried to argue with AIOC head Sir William Fraser, Fraser "dismissed him" and flew back to the UK.^[10]

In late December 1950 word reached Tehran that the American-owned Arabian American Oil Company had agreed to share profits with Saudis on a 50-50 basis. The UK Foreign Office rejected the idea of any similar agreement for AIOC.^[11]

By now expressions of Iranian anger against lack of support for nationalization included a distinct lack of mourning following the assassination of anti-nationalization prime minister Haj Ali Razmara,^[12] and a raucous walkout of protest by newspaper reporters when a visiting American diplomat urged 'reason as well as enthusiasm' to deal with the British embargo of Iran.^[13]

Nationalisation[link]

In March 1951, the Iranian parliament (the Majlis) voted to nationalise the Anglo-Iranian Oil Company (AIOC) and its holdings, and shortly thereafter elected a widely respected statesman and champion of nationalisation, Mohammed Mossadegh, Prime Minister.^[14] This led to the Abadan Crisis where foreign countries refused to take Iranian oil under British pressure and the Abadan refinery was closed. AIOC withdrew from Iran and increased output of its other reserves in the Persian Gulf.

Mossadeq broke off negotiations with AIOC in July 1951 when the AIOC threatened to pull its employees out of Iran and warned tanker owners that "the receipts from the Iranian government would not be accepted on the world market."^[15] The British ratcheted up the pressure on the Iranian government and explored the possibility of an invasion to occupy the oil area. US President Harry S. Truman and US ambassador to Iran Henry F. Grady opposed intervention in Iran but needed Britain's support for the Korean War. Efforts by the U.S. through the International Court of Justice were made to settle the dispute, but a 50/50 profit-sharing arrangement, with recognition of nationalization, was rejected by both the British government and Prime Minister Mossadegh.

As the months went on, the crisis became acute. By mid-1952, an attempt by the Shah to replace Mossadegh backfired and led to riots nationwide; Mossadegh returned with even greater power. At the same time however, his coalition was "fraying," as Britain’s boycott of Iranian oil eliminated a major source of government revenue, and made Iranians "poorer and unhappier by the day."^[16]

Coup[link]

By 1953 both the US and the UK had new, more anti-communist and interventionist administrations and the United States no longer opposed intervention in Iran. Britain was unable to subvert Mossadegh as its embassy and officials had been evicted from Iran in October 1952, but successfully appealed in the U.S. to anti-communist sentiments, depicting both Mossadegh and Iran as unstable and likely to fall to communism in their weakened state. If Iran fell, the "enormous assets" of "Iranian oil production and reserves" would fall into Communist control, as would "in short order the other areas of the Middle East".^[17] In August the American CIA with the help of bribes to politicians, soldiers, mobs, and newspapers, and contacts/information from the British embassy and secret service, organized a coup. The Shah issued an edict removing Mosaddeq from power and General Fazlollah Zahedi led tanks to Mosaddeq's residence forcing him from office.

Consortium[link]

With the new pro-Western Prime Minister, Fazlollah Zahedi, Iranian oil began flowing again and the Anglo-Iranian Oil Company, which later changed its name to British Petroleum, tried to return to its old position. However, "public opinion was so opposed that the new government could not permit it." Instead, an international consortium under the nationalised name (National Iranian Oil Company) was created, with the Anglo-Iranian Oil Company holding 40% of the shares. The consortium agreed to share profits on a 50-50 basis with Iran, "but not to open its books to Iranian auditors or to allow Iranians onto its board of directors."^[18]

Subsidiary companies[link]

Scottish Oils Ltd[link]

Scottish Oils Ltd (owned by Anglo-Persian) was a producer of shale oil. It was formed between 1918 and 1920 by the merger of five smaller Scottish oil shale companies: Youngs, Broxburn, Pumpherston, Oakbank and Philpstoun.^[19][20][21] Shale oil production in Scotland ceased in the early 1960s but there was an unsuccessful attempt to revive it in 1973.^[22] The company still exists^[23] but is no longer in the shale oil business.

Tanker fleet[link]

The British Tanker Company Limited (BTC) was formed in 1915, after the Anglo-Persian Oil Company decided to become a fully self-contained operation, directly owning a fleet of tankers for sea transport. On formation, the BTC had an initial budget of $144,000 with which to build seven steam-powered tankers. The Company’s first tanker was the British Emperor, which was launched in 1916. The names of the first seven ships, and all later additions to the fleet, bore the prefix ‘British’. Over the next decade, the demand for oil grew throughout the developed world, and the BTC expanded accordingly. By 1924, the fleet numbered 60 ships, with the 60th being the flagship, 10,762 deadweight tonnes (dwt), British Aviator. She was the BTC’s first diesel engine oil tanker, and at that time was the most powerful single-screw motor ship in the world.

The economic depression of the early 1930s saw rising unemployment amongst merchant navies around the world. However, the BTC undertook a series of strategic mergers, and coupled with the continued support of the Shah of Iran, the APOC succeeded in strengthening its position within the industry. In 1939, the British government chartered the whole fleet of 93 tankers to supply fuel to its armed forces during the Second World War. The fleet lost a total of 42 ships sunk during the war.

Within a year of peace in 1945, the BTC fleet had returned to its pre-war total of 93 vessels. The recovery continued with the building of 57 new tankers, each 12,000 dwt, which increased the tonnage of oil transported from Abadan refinery in Iran, whilst remaining light enough for the tankers to pass through the shallow waters of the Suez Canal.

In 1951, however, the situation changed dramatically, when the Iranian oil industry was nationalised, and the APOC removed all its staff from Iran.

See also[link]

	Iran portal
	United Kingdom portal
	Energy portal
	Companies portal

• Anglo-Persian Agreement
• Anglo-Soviet invasion of Iran
• National Iranian Oil Company
• Abadan Crisis timeline
• 1953 Iranian coup d'état
• Mohammad Mossadegh
• Hossein Fatemi
• Dariush Forouhar
• Operation Ajax
• Abdolhossein Teymourtash
• John Cadman, 1st Baron Cadman

References[link]

v t e Energy in Iran Oil National Iranian Oil Company · National Tanker Company · Iranian Offshore Engineering and Construction Company · Iranian Offshore Oil Company · National Iranian Drilling Company · North Drilling Company · Oil Bourse · Oil reserves · OPEC Gas National Iranian Gas Company · Iran LNG · Persian LNG · Gas reserves · South Pars Gas Field · Gas Exporting Countries Forum Gasoline National Iranian Oil Refining and Distribution Company · 2007 Gas Rationing Plan in Iran · Fuel smuggling Petrochemicals National Iranian Petrochemical Company · Asalouyeh industrial corridor · Marun · Free Trade Zones Pipelines Tabriz–Ankara · Korpezhe–Kurt Kui · Dauletabad–Sarakhs–Khangiran · Iran–Pakistan–India · Neka–Jask · Iran-Armenia · Gas Trunkline · Persian · Nabucco Nuclear Atomic Energy Organization · Nuclear program · Facilities (Bushehr · IR-40 · Darkhovin) · Timeline Wind Wind power Related Ministry of Energy · Ministry of Petroleum · Petroleum industry in Iran · Environment · Caspian Sea · Strait of Hormuz · Kharg Island · List of power stations · Reservoirs and dams · Transport · Privatization (MAPNA · AZAR AB · IDRO) · Construction (Khatam al-Anbia · SADRA · ISOICO · DESA - Iran Heavy Diesel Manufacturing Company) · Foreign direct investment · Economy of Iran · Subsidy reform plan · Oil Stabilization Fund & National Development Fund · Sanctions against Iran · Energy superpower · Anglo-Persian Oil Company

World oil reserves, 2009.

The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.

Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization in its current configuration, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from as low of 32% for Europe and Asia, up to a high of 53% for the Middle East.

Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007.^[1] The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value.

Governments such as the United States government provide a heavy public subsidy to petroleum companies, with major tax breaks at virtually every stage of oil exploration and extraction, including for the costs of oil field leases and drilling equipment.^[2]

History[link]

Natural history[link]

Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is generally accepted that oil is formed mostly from the carbon rich remains of ancient plankton after exposure to heat and pressure in the Earth's crust over hundreds of millions of years. Over time, the decayed residue was covered by layers of mud and silt, sinking further down into the Earth’s crust and preserved there between hot and pressured layers, gradually transforming into oil reservoirs.^{[citation needed]}

Early history[link]

Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil in general has been used since early human history to keep fires ablaze, and also for warfare.

Its importance in the world economy evolved slowly, with whale oil used for lighting into the 19th century, and wood and coal used for heating and cooking well into the 20th Century. The Industrial Revolution generated an increasing need for energy which was fueled mainly by coal, with other sources including whale oil. However, it was discovered that kerosene could be extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand, and by the twentieth century had become the most valuable commodity traded on the world market.^[3]

Modern history[link]

Galician oil wells

Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by mid-century.^[4] After oil drilling began in what is now Azerbaijan in 1848, two large pipelines were built in the Russian Empire: the 833 km long pipeline to transport oil from the Caspian to the Black Sea port of Batumi (Baku-Batumi pipeline), completed in 1906, and the 162 km long pipeline to carry oil from Chechnya to the Caspian.

At the turn of the 20th century, Imperial Russia's output of oil, almost entirely from the Apsheron Peninsula, accounted for half of the world's production and dominated international markets.^[5] Nearly 200 small refineries operated in the suburbs of Baku by 1884.^[6] As a side effect of these early developments, the Apsheron Peninsula emerged as the world's "oldest legacy of oil pollution and environmental negligence."^[7] In 1878, Ludvig Nobel and his Branobel company "revolutionized oil transport" by commissioning the first oil tanker and launching it on the Caspian Sea.^[5]

The first modern oil refineries were built by Ignacy Łukasiewicz near Jasło (then in the dependent Kingdom of Galicia and Lodomeria in Central European Galicia), Poland from 1854–56.^[8] These were initially small as demand for refined fuel was limited. The refined products were used in artificial asphalt, machine oil and lubricants, in addition to Łukasiewicz's kerosene lamp. As kerosene lamps gained popularity, the refining industry grew in the area.

In Canada, oil extraction began in 1858 in Oil Springs, Ontario.^[9] The first modern oil drilling in the United States began in West Virginia and Pennsylvania in the 1850s. Edwin Drake's 1859 well near Titusville, Pennsylvania, is typically considered the first true modern oil well, and touched off a major boom. ^{[10] [11]}In the first quarter of the 20th century, the United States overtook Russia as the world's largest oil producer. By the 1920s, oil fields had been established in many countries including Canada, Poland, Sweden, the Ukraine, the United States, Peru and Venezuela. ^[12]

The first successful oil tanker, the Zoroaster, was built in 1878 in Sweden, designed by Ludvig Nobel. It operated from Baku to Astrakhan.^[13] A number of new tanker designs were developed in the 1880s.

In the early 1930s the Texas Company developed the first mobile steel barges for drilling in the brackish coastal areas of the Persian Gulf. In 1937 Pure Oil Company (now part of Chevron Corporation) and its partner Superior Oil Company (now part of ExxonMobil Corporation) used a fixed platform to develop a field in 14 feet (4.3 m) of water, one mile (1.6 km) offshore of Calcasieu Parish, Louisiana. In early 1947 Superior Oil erected a drilling/production oil platform in 20 ft (6.1 m) of water some 18 miles^[vague] off Vermilion Parish, Louisiana. But it was Kerr-McGee Oil Industries (now Anadarko Petroleum Corporation), as operator for partners Phillips Petroleum (ConocoPhillips) and Stanolind Oil & Gas (BP), that completed its historic Ship Shoal Block 32 well in October 1947, months before Superior actually drilled a discovery from their Vermilion platform farther offshore. In any case, that made Kerr-McGee's well the first oil discovery drilled out of sight of land.^[14][15]

After World War II ended, the countries of the Middle East took the lead in oil production from the United States. Important developments since World War II include deep-water drilling, the introduction of the Drillship, and the growth of a global shipping network for petroleum relying upon oil tankers and pipelines. In the 1960s and 1970s, multi-governmental organizations of oil–producing nations OPEC and OAPEC played a major role in setting petroleum prices and policy. Oil Spills and their cleanup have become an issue of increasing political, environmental, and economic importance.

Industry structure[link]

The American Petroleum Institute divides the petroleum industry into five sectors:^[16]

• upstream (exploration, development and production of crude oil or natural gas)
• downstream (oil tankers, refiners, retailers and consumers)
• pipeline
• marine
• service and supply

Oil companies used to be classified by sales as "supermajors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell, Eni and Total S.A.), "majors", and "independents" or "jobbers". In recent years however, National Oil Companies (NOC, as opposed to IOC, International Oil Companies) have come to control the rights over the largest oil reserves; by this measure the top ten companies all are NOC. The following table shows the ten largest oil companies ranked by reserves^[17] and by production.^[18]

Most upstream work in the oil field or on an oil well is contracted out to drilling contractors and oil field service companies.^{[citation needed]}

Environmental impact and future shortages[link]

Some petroleum industry operations have been responsible for water pollution through by-products of refining and oil spills.

The combustion of fossil fuels produces greenhouse gases and other air pollutants as by-products. Pollutants include nitrogen oxides, sulphur dioxide, volatile organic compounds and heavy metals.

As petroleum is a non-renewable natural resource the industry is faced with an inevitable eventual depletion of the world's oil supply. The BP Statistical Review of World Energy 2007 listed the reserve/production ratio for proven resources worldwide. The study placed the prospective life span of proven reserves in the Middle East at 79.5 years, Latin America at 41.2 years and North America at only 12 years.

The Hubbert peak theory, which introduced the concept of peak oil, questions the sustainability of oil production. It suggests that after a peak in oil production rates, a period of oil depletion will ensue. Since virtually all economic sectors rely heavily on petroleum, peak oil could lead to a partial or complete failure of markets.^[19]

According to research by IBISWorld, biofuels (primarily ethanol, but also biodiesel) will continue to supplement petroleum. However output levels are low, and these fuels will not displace local oil production. More than 90% of the ethanol used in the US is blended with gasoline to produce a 10% ethanol mix, lifting the oxygen content of the fuel.^[20]

Petroleum industry in popular culture[link]

The petroleum industry's influence on modern society has made it a favorite subject in contemporary literature.

See also[link]

Energy portal

• Instrumentation in petrochemical industries
• List of crude oil products
• List of petroleum companies
• Oil depot
• Oil refinery
• Oil supplies
• Oil well
• Integrated operations
• Standardisation in oil industry

Environmental issues

• Greenhouse gases
• Petroleum disasters
• Renewable energy

Financial and political

• Chronology of world oil market events (1970-2005)
• Energy crisis: 1973 energy crisis, 1979 energy crisis
• Energy development
• Petroleum politics
• Oil imperialism
• Oil price increases since 2003
• Oil-storage trade
• OPEC
• Peak oil
• Oil and gas law in the United States

Oil geology

• Abiogenic petroleum origin
• Fossil fuel
• Oil sands
• Petroleum geology
• Thermal depolymerization

Oil-producing areas

• History of the petroleum industry in Canada
• History of the petroleum industry in the United States
• List of oil fields
• Oil Megaprojects
• List of oil-producing states
• Oil industry in Azerbaijan

Industry Research Projects

• TaskForceMajella

References[link]

Further reading[link]

• Ordons Oil & Gas Information & News http://www.ordons.com
• Robert Sobel The Money Manias: The Eras of Great Speculation in America, 1770-1970 (1973) reprinted (2000).
• Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power, (Simon and Schuster 1991; paperback, 1993), ISBN 0-671-79932-0.
• Matthew R. Simmons, Twilight in the Desert The Coming Saudi Oil Shock and the World Economy, John Wiley & Sons, 2005, ISBN 0-471-73876-X.
• Matthew Yeomans, Oil: Anatomy of an Industry (New Press, 2004), ISBN 1-56584-885-3.
• Smith, GO (1920): Where the World Gets Its Oil: National Geographic, February 1920, pp 181–202
• Vassiliou, M.S. Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press (Rowman & Littlefield), 700pp. ISBN 0-8108-5993-9.

External links[link]

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Stephen Kinzer is a United States author and newspaper reporter. He is a veteran New York Times correspondent who has reported from more than fifty countries on five continents. During the 1980s he covered revolution and social upheaval in Central America. In 1990, he was promoted to bureau chief of the Berlin bureau and covered the growth of Eastern and Central Europe as they emerged from Soviet rule. He was also New York Times bureau chief in Istanbul (Turkey) from 1996 to 2000. He currently teaches journalism and United States foreign policy at Boston University.

Kinzer has written several non-fiction books about Turkey, Central America, Iran, the US overthrow of foreign governments from the late 19th century to the present and, most recently, about Rwanda's recovery from genocide. He has spoken out widely against a potential U.S. attack on Iran, warning that it would destroy the pro-US sentiment that has become widespread among the Iranian populace under the repressive Islamic regime. He is a fierce opponent of US foreign policy toward Latin America. In a 2010 interview with Imagineer Magazine, he stated:

The effects of U.S. intervention in Latin America have been overwhelming negative. They have had the effect of reinforcing brutal and unjust social systems and crushing people who are fighting for what we would actually call “American values.” In many cases, if you take Chile, Guatemala, or Honduras for examples, we actually overthrew governments that had principles similar to ours and replaced those democratic, quasi-democratic, or nationalist leaders with people who detest everything the United States stands for.^[1]

Bibliography[link]

• Bitter Fruit: The Story of the American Coup in Guatemala, with Stephen Schlesinger; Doubleday, 1982; revised ed. Harvard University Press, ISBN 0-674-07590-0^[2]
• Crescent and Star: Turkey Between Two Worlds, Farrar, Straus and Giroux, 2001, ISBN 0-374-13143-0
• All the Shah's Men: An American Coup and the Roots of Middle East Terror, John Wiley & Sons, 2003, ISBN 0-471-26517-9
• Overthrow: America's Century of Regime Change from Hawaii to Iraq, Times Books, 2006, ISBN 0-8050-7861-4
• Blood of Brothers: Life and War in Nicaragua, with a new afterword, Harvard University Press, 2007, ISBN 0-674-02593-8
• A Thousand Hills: Rwanda's Rebirth and the Man Who Dreamed It, John Wiley & Sons, 2008, ISBN 978-0-470-12015-6
• Reset: Iran, Turkey, and America's Future, Times Books, 2010, ISBN 978-0-8050-9127-4.
• Reset also published as Reset Middle East: Old Friends and New Alliances: Saudi Arabia, Israel, Turkey, Iran, I.B. Tauris, 2010, ISBN 978-1-84885-765-0

See also[link]

• Overthrow: America's Century of Regime Change From Hawaii to Iraq Article about Kinzer's book
• Covert United States foreign regime change actions
• Timeline of United States military operations
• Killing Hope Article about a book on U.S. Military and C.I.A. Interventions since World War by William Blum

Notes[link]

External links[link]

• Stephen Kinzer's personal website, July 2008 (videos, articles, pictures, bio, book info, upcoming events)
• Interview about the United States and Iran, Democracy Now!, March 3, 2008 (video, audio, and print transcript)
• Interview with Kinzer for Guernica Magazine
• Booknotes interview with Kinzer on Crescent & Star: Turkey Between Two Worlds, October 21, 2001.
• "Empirical Evidence", on WNYC's The Brian Lehrer Show, April 26, 2006
• "Author Kinzer Charts 'Century of Regime Change'" on NPR's Fresh Air, April 5, 2006
• Part 1: Overthrow: America's Century of Regime Change from Hawaii to Iraq, Democracy Now!, April 21, 2006 (video, audio, and print transcript)
• Part 2: Overthrow: America's Century of Regime Change from Hawaii to Iraq, Democracy Now!, May 8, 2006 (video, audio, and print transcript)
• Interview with Stephen Kinzer and Martha Cardenas (mp3) February 10, 2008
• Interview with Stephen Kinzer in Imagineer Magazine on Latin American foreign policy
• Stephen Kinzer: "Reset: Iran, Turkey, and America’s Future" - video interview
• Stephen Kinzer on the History of BP/British Petroleum and Its Role in the 1953 Iran Coup