First oil was struck in Iraq at Baba Gurgur in 1927. Thereafter, the company changed its name to the Iraq Petroleum Company (IPC) and was constituted by six shareholders. Interests were split equally in shares of 23.5% among the Anglo-Persian Oil Company (later Anglo-Iranian), Shell, Compagnie Française des Pétroles, and the consortium of American oil companies called the Near East Development Corporation. The remaining 5% was given to the Armenian businessman Calouste Gulbenkian. The companies established the so-called
“Red Line Agreement,” a decision to favor cooperation in territories of the former Ottoman Empire. In short, IPC dominated production inside the red line for twenty years while the arrangement remained in effect.
By the time the League of Nations recognized Iraq’s independence in 1932, a single company had established control over all of the country’s known and potential oil reserves. This meant that IPC could control production of Iraqi oil for foreign markets according to the interest of its shareholders and without regard for the expectations of the Iraqi government. IPC shareholders with ongoing major crude production elsewhere – including Anglo-Persian and Shell – remained reluctant to initiate extraction in Iraq for fear of creating a market surplus and forcing prices to plummet and thus IPC restricted its exploration to just one half of one percent of land in the country. In other words, the Iraqi government had sold control of its oil to a company that had no intention of developing its potential in the near future.As mentioned above, the Atlantic Charter and the Anglo-American agenda espousing self-determination in former colonies was decreed in 1941. Accordingly, imperial discourses of conquest were reproduced as promises of progress for the territories under British control in the Middle East and elsewhere. By this time Anglo-Persian had established Abadan as the site of the world’s largest and most productive oil refinery. Poor labor conditions and meager profits inspired broad support among Iranians for nationalization of the oil company, and in 1951 the Majlis (Parliament) voted in favor of this move. Mohammed Mossadegh was elected Prime Minister and championed a movement to nationalize Iran’s oil facilities, resulting in
major labor strikes across the country and, ultimately, the British company’s pull out from Abadan and the British state’s call for international boycott of Iranian oil.
