Setting Oil Policy After the War



Author: Kaveh Ehsani, Leiden University 
[ From “The social history of labor in the Iranian oil industry : the built environment and the making of the industrial working class (1908-1941)” ]


As one of Britain’s major petrochemical and primary industrial materials producers, the attitudes and praxis of APOC directors and experts were constantly being shaped by this wartime experience at home, on a rapidly remapped and increasingly competitive global market, as well as in Khuzestan and its other areas of its operation. The shifting geopolitical landscape affected APOC’s policies at various levels, in Britain and Europe, as well as in Iran and the Persian Gulf. In 1916, the powerful Board of Trade drew up a memorandum for consideration by the Cabinet titled “The Future of Oil Supplies”. It was the first indication of the recognition of the vital strategic importance of oil supplies not just for the country but also for the empire itself[110]. A protracted debate ensued where two options were considered: To establish a wholly British monopoly company, or to amalgamate APOC with Royal Dutch Shell (RDS) into a jointly owned British-Dutch company. Both were awkward options, as the government was uncomfortable with its majority investment in APOC, a supposedly private corporation, while APOC and its supporters lobbied hard to portray RDS as a foreign concern. The possibility of compelling RDS to become a wholly British Company was briefly considered but was eventually abandoned as impractical[111]. John Cadman, the head of the Petroleum Executive (and future APOC Chairman), set up the Harcourt Committee in 1918 to draw up a comprehensive appraisal of the national and imperial oil problem: “The time has arrived to when it is necessary to formulate a policy by which His Majesty’s Government shall be guided in all matters relating to the advancement and direction of petroleum industries”[112]. The Committee reported to Cadman that,
“The present war has demonstrated the numerous purposes for which the British Empire is dependent on petroleum and its products, of which 80 percent of its supply come from the United States…the industrial supremacy of the British Empire has been built upon vast coal resources. The Committee was asked to consider what steps should be taken to secure control of as much as possible of the world’s supply of natural petroleum…the future of the Empire depended on a satisfactory solution of its oil problems and that opportunities for such strengthening the position exists now which may not recur, and no time should be lost in deciding on the policy which will ensure to the British Empire adequate supplies of petroleum products”[113]
What this resolution meant in practical terms was the acknowledgment that a strategic shift from coal to oil in industrial and military spheres was now an unavoidable reality that needed to be acknowledged and managed. This acknowledgment translated into the government encouragement and support for APOC to plan for aggressive future involvement in the development of oil resources outside Iran (Persian Gulf and Mesopotamia being the first instances), and of the expansion of its industrial and consumer market activities in Britain. As for the British government, this strategic outlook shaped its post-war policy toward the Persian Gulf and the Middle East, as was discussed in chapter 2[114]. In 1918-1922, at the same time as Abadan refinery was in a state of expansion and consolidation, APOC began the building of Llandarcy (named after William Knox D’Arcy), the first major oil refinery in Britain located in South Wales coast, near the Swansea docks. The refinery at its peak employed 2600 people. A company town was built nearby with 260 houses, together with a community center, and local stores, all owned by the Company[115]. In contrast Abadan, the heart of the Company’s global operations, was altogether on a different scale. By mid 1920s, Abadan had an estimated population of 60 thousand, and the housing question there involved massive logistic and geopolitical challenges, and the production of company housing and designing and maintaining a company town planning would take another three decades of protracted and ever expanding efforts to implement (see chapters 5 and 6). In the end, urban problems and especially workers’ housing shortages significantly contributed to labor discontent during the nationalization era, and the eventual eviction of AIOC from Iran in 1951.
APOC clearly drew important lessons from the wartime housing crisis when dealing the urban crisis in Abadan. These accumulated experiences across the Company’s vast geographies of operations (in Wales, Khuzestan, Mesopotamia, etc.) contributed to shaping the patterns of paternalistic and self-interested interventions in the urban life of its workers. How these experiences were translated into Company practices and contributed to the formulation and implementation of social policies in Abadan need to be studied in connection to the local dynamics there, as we shall discuss in the next chapters.


10 Ferrier, History of the British Petroleum Company, 1:243.

111 Ibid., 1:253–261.

112 Ibid., 1:252.

113 Ibid., 1:252–253.
14 Geoffrey Jones, The State and the Emergence of the British Oil Industry (London: Mac Millan, 1981); Helmut Mejcher, Imperial Quest for Oil: Iraq 1910-1928 (London: Ithaca Pres, 1976); Adelson, London and the Middle East.

115. “Llandarcy: Down to The Last Drop,” BBC, December 2, 2009, sec. History, m; National Oil Refineries. Anglo-Iranian Oil Co., Llandarcy Refinery. ([London]: Anglo-Iranian Oil Co., 1953); Ferrier, History of the British Petroleum Company, 1:453–454.

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