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A 138-mile long pipeline was to be constructed for the transportation of the transportation of oil to Abadan.Storage and loading facilities were also planned for construction. Sheikh Khazal, ruler of Mohammara (Khorramshahr) who had longstanding ties with Britain’s diplomatic representative in the Persian Gulf places the land required for the refinery, at the disposal of the company. Based on an agreement, in addition to an annual lease, the Sheikh was to receive a loan of 10 thousand pounds. The British diplomatic representative also assured the Sheikh and his family, of his respective government’s support and protection.       It was evident that the company was strengthening its position on the basis of British diplomatic officials’ influence, completely neglecting the central government of Iran. The company’s arrangements with Bakhtiari tribal heads and Sheikh Khazal were examples of such measures that Rreza Shah’s government took full control and suppressed the sheikhs and tribal heads.       This working style was abandoned throughout the fifteen-year period reza shah was in power. But after 25 august 1941 when the british military forces entered iran,that same approach resumed more vigoroust.

Oil Refining Export Operations in Iran Refinery

Construction operation began in october 1909. Company employees who ot time were limited to several drillers,mechanics, an accountant and a physician , rose to 2500 in n 1911, the company’s airplane landed in iran for the first time and the first iranian crude oil cargo was lifted for export in 1912 by 1914, there were altogether 30 oil wells drilled in masjid-e-solaiman area.the company and the british government reached an agreement in the same vear wherebythe latter became the majority shareholder of the company .       From then on,the british government had two members on the company board of directors with special powers to veto those decisions of the board which were considered contrary to the interests of the british government the arrangement was approved by britain’s house of commons on 17 june 1914 ,on the eve of the first world war.Based on a confidential agreement negotiated with the british admiralty, the company undertook to supply all the fuel requirements of the british navy at low prices . The First world war (1914-1918) proved the tremendous importance of oil .       The use of oil in wars dates back to oldem times. In explaining the organization of the ancient warrior forces, historians have repeatedly referred to horsemen, infantrymen, archers and “ oil-throwers”. But the use of oil in contemorary wars is not so limited. All the awesome movement and firepower in today’s ground, sea and air wars, in fact, are possible, only because of oil. Without it, personnel carriers, tanks, and fighter planes will not be able to move. Based on this same reality, lord curzon said after the first world war that the war was won on waves of oil.

Rising Differences

Britain had come to appreciate the importnce of Iranian concession it had obtained through william knox D’Arcy. This, however, did not cause either the company or the British government to be appreciative of and grateful to Iran. On the contrary, their greed and, avaice increased with the rising imporyance and value of oil. Although Iran had declared neutrality in WWI, warring forces turned Iranian territory into a warzone. Operations of the pipeline that transferred oil from masjid-e-solaiman to abadan was interrupted by German inspired saboteurs, and it took 5 months to get it repaired.

Reza Khan and the Oil Peoblem Reza
Khan who entered the Iranian politics as a result of the 1921 coupd’etat, became Prime Minister in 1923 and had his coronation in 1925. First, he made all efforts to put an end to the activities of Sheikh Khazal who considered himself the ruler of Arabia, and had practically pulled Khorramshahr and Ahwaz out of the control and authority of the central government of Iran. The Sheikh was apprehended in early 1925 and spent the rest of his life in Tehran under house arrest.       Reza Khan established a security and order that served the interests of the company. Government’s powers prevented workers from forming unions or voicing their objections. The first case of southern oil workers’ strike happened in 1929. Living conditions of local workers were very poor and intolerable. The total number of oil industry employees amounted to 30,000, out of which 6000 were British and Indian Government forces put an end to the strike and about 200 instigators and agitators were arrested. Some of them were kept imprisoned until the culmination of Reza Shah’s rule.       A year after coronation, Reza Shah concentrated his attention on the issue of oil. He needed money for his ambitious plans of cross-country railroad and military programs. The government first believed that the oil conflict had to be referred to arbitration, but the company suggested that the should solve the problem through negotiation. more ...                                                        back
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