The Consortium Agreement of 1954

Last updated

The Consortium Agreement of 1954 provided Western oil companies with 50% ownership of Iranian oil production after its ratification in 1954 expiring in 1979. [1] In spite of numerous negotiations and offers the Shah of Iran refused to extend the contract.

A year after the overthrow of Premier Mohammad Mossadegh by the United States and the United Kingdom in the 1953 Iranian coup d'état, the British and American governments began pressuring the reinstated Shah of Iran into negotiations with Britain over the ownership of the Anglo-Persian Oil Company. The British cabinet had imposed a series of economic sanctions on Iran that prohibited the export of key commodities to Iran. [2] Britain's boycott had become devastatingly effective, with Iranians "becoming poorer and unhappier by the day". [3] The dispute was finalized with the incorporation of a 25-year international Oil Consortium Agreement of 1954, which provided British Petroleum, along with American and French oil companies, with 50% ownership of Iranian oil expiring in 1979.” [4]

The agreement, which was heavily pressured by President Eisenhower, gave American oil companies complete control over how much petroleum Iran pumped and the price it could sell for. [5] Beginning in 1973, the Shah faced increasing tensions with Western nations after announcing he would not renew the consortium agreement upon its expiration and planned to nationalize Iranian oil in 1979. The Shah, speaking to 5,000 farmers and workers, accused the oil companies of mishandling operations under the 1954 agreement. He said he had ordered the National Iranian Oil Company to start hiring foreign experts to work with Iranians so the company could take over the consortium's duties “either immediately or from 1979.” [4]

Many Iranians accuse Western nations of supporting the overthrow of the Shah due to his failure to renew the consortium agreement in 1979 in what is known as the 1979 Iranian Revolution conspiracy theory. [6] According to the New York Times, the oil companies, through a spokesman, argued that the Shah did not have a legal right to end their contract in 1979, because Iran had the choice of renewing it for 15 years. [7]

Related Research Articles

Mohammad Mosaddegh Prime Minister of Iran from 1951 to 1953

Mohammad Mosaddegh was an Iranian politician who served as the 35th Prime Minister of Iran, holding office from 1951 until 1953, when his government was overthrown in the 1953 Iranian coup d'état orchestrated by the United States' Central Intelligence Agency and the United Kingdom's MI6.

1953 Iranian coup détat British–American coup that deposed a democratically-elected Iranian prime minister

The 1953 Iranian coup d'état, known in Iran as the 28 Mordad coup d'état, was the overthrow of the democratically elected Prime Minister Mohammad Mosaddegh in favour of strengthening the monarchical rule of the Shah, Mohammad Reza Pahlavi on 19 August 1953. It was orchestrated by the United States and the United Kingdom. The clergy also played a considerable role.

Anglo-Persian Oil Company English energy company founded in 1908

The Anglo-Persian Oil Company (APOC) was a British company founded in 1908 following the discovery of a large oil field in Masjed Soleiman, Iran. The British government purchased 51% of the company in 1914, gaining a controlling number of shares, effectively nationalizing the company. It was the first company to extract petroleum from Iran. In 1935 APOC was renamed the "Anglo-Iranian Oil Company" (AIOC) when Reza Shah Pahlavi formally asked foreign countries to refer to Persia by its endonym Iran.

Tudeh Party of Iran Political party in Iran

The Tudeh Party of Iran is an Iranian communist party. Formed in 1941, with Soleiman Mirza Eskandari as its head, it had considerable influence in its early years and played an important role during Mohammad Mosaddegh's campaign to nationalize the Anglo-Persian Oil Company and his term as prime minister. The crackdown that followed the 1953 coup against Mosaddegh is said to have "destroyed" the party, although a remnant persisted. The party still exists, but has remained much weaker as a result of its banning in Iran and mass arrests by the Islamic Republic in 1982, as well as the executions of political prisoners in 1988.

Abadan Crisis Oil crisis in Iran from 1951 to 1954

The Abadan Crisis occurred from 1951 to 1954, after Iran nationalised the Iranian assets of the BP controlled Anglo-Iranian Oil Company (AIOC) and expelled Western companies from oil refineries in the city of Abadan.

Iraq Petroleum Company England-based oil company

The Iraq Petroleum Company (IPC), known prior to 1929 as the Turkish Petroleum Company (TPC), is an oil company which, between 1925 and 1961, had a virtual monopoly on all oil exploration and production in Iraq. It is jointly owned by some of the world's largest oil companies and headquartered in London, England, although today it is a paper entity with historical rights and plays no part in the modern development of Middle Eastern oil.

National Front (Iran) Opposition political party in Iran

The National Front of Iran is an opposition political organization in Iran, founded by Mohammad Mosaddegh in 1949. It is the oldest and arguably the largest pro-democracy group operating inside Iran despite having never been able to recover the prominence it had in the early 1950s.

National Iranian Oil Company

The National Iranian Oil Company is a government-owned national oil and natural gas producer and distributor under the direction of the Ministry of Petroleum of Iran. NIOC was established in 1948 and restructured under The Consortium Agreement of 1954. NIOC ranks as the world's second largest oil company, after Saudi Arabia's state-owned Aramco.

<i>All the Shahs Men</i>

All the Shah's Men: An American Coup and the Roots of Middle East Terror is a book written by American journalist Stephen Kinzer. The book discusses the 1953 Iranian coup d'état backed by the U.S. Central Intelligence Agency (CIA) in which Mohammed Mossadegh, Iran's democratically elected prime minister, was overthrown by Islamists supported by American and British agents and royalists loyal to Shah Mohammad Reza Pahlavi.

Haj Ali Razmara Iranian Prime Minister (1950-51) and military leader

Ali Razmara, also known as Haj Ali Razmara, was a military leader and prime minister of Iran.

For further details see the "Energy crisis" series by Facts on File.

The nationalization of oil supplies refers to the process of confiscation of oil production operations and private property, generally in the purpose of obtaining more revenue from oil for oil-producing countries' governments. This process, which should not be confused with restrictions on crude oil exports, represents a significant turning point in the development of oil policy. Nationalization eliminates private business operations—in which private international companies control oil resources within oil-producing countries—and allows oil-producing countries to gain control of private property. Once these countries become the sole owners of these confiscated resources, they have to decide how to maximize the net present value of their known stock of oil in the ground. Several key implications can be observed as a result of oil nationalization. "On the home front, national oil companies are often torn between national expectations that they should 'carry the flag' and their own ambitions for commercial success, which might mean a degree of emancipation from the confines of a national agenda."

<i>Anglo-Iranian Oil Co. case</i>

The United Kingdom v Iran [1952] ICJ 2 was a public international law dispute between the UK and Iran. This case concerned the nationalization of Iran's oil which had been, in large part, controlled by the United Kingdom since the early 20th century.

The Iranian Revolution of 1979, in which Shah Mohammed Reza Pahlavi was overthrown and replaced by an Islamist government led by Ruhollah Khomeini, has been the subject of conspiracy theories alleging Western involvement, in particular, that the United States and the United Kingdom secretly opposed the Shah because his White Revolution and Iran's growing independence was unfavorable to their interests in Iranian petroleum. In his own memoirs, Answer to History, the Shah alleges that Western forces most prominently England, the United States, and Big Oil conspired against him all for their own reasons while most notably, he claims due to his manipulation of oil prices.

Monarchism in Iran Political movement in post-revolutionary Iran

Iranian monarchism is the advocacy of restoring the constitutional monarchy in Iran, which was abolished after the 1979 Revolution.

The D'Arcy Concession was a petroleum oil concession that was signed in 1901 between William Knox D'Arcy and Mozzafar al-Din, Shah of Persia. The oil concession gave D'Arcy the exclusive rights to prospect for oil in Persia. During this exploration for oil, D'Arcy and his team encountered financial troubles and struggled to find sellable amounts of oil. They were about to give up but eventually struck large commercial quantities of oil in 1908. After these large commercial quantities of oil were found, the Anglo-Persian Oil Company took over the concession in 1909.

Herbert Hoover Jr.

Herbert Charles Hoover was an engineer, businessman, and politician who served as United States Under Secretary of State from 1954 to 1957. He was the elder son of President Herbert Hoover.

The Middle East has been a region of geopolitical and economic significance to the world far before American involvement in the area. This was largely because the “Middle East contained or bordered on the land bridges, passageways, and narrows – the Sinai isthmus, the Caucuses, the Strait of Gibraltar, the Dardanelles, Bab el Mandeb, and the Strait of Hormuz – and the sheltered seas – the Mediterranean, the Black Sea, the Caspian Sea, the Red Sea, and the Persian Gulf – that provided the best routes connecting the different extremities of the vast Eurasian/African continent.” The value of being a prominent player in the region was therefore obvious to the United States as well as to several other Western powers including Great Britain and France. In addition to its pivotal geographic location in the world, the abundance of oil in the Middle East has probably played the biggest role in issues of foreign policy and international relations. The United States needed Middle Eastern oil and Middle Eastern nations needed Western capital and technology. This mutually beneficial but dependent relationship would forge strong alliances but also be the cause of harsh conflicts.

Nationalization of the Iranian oil industry Nationalization of oil companies in Iran in 1951

The nationalization of the Iranian oil industry resulted from a movement in the Iranian parliament (Majlis) to seize control of Iran's oil industry, which had been run by private companies, largely controlled by foreign interests. The legislation was passed on March 15, 1951, and was verified by the Majlis on March 17, 1951. The legislation led to the nationalization of the Anglo-Persian Oil Company (AIOC). The movement was led by Mohammad Mosaddegh, a member of the Majlis for the National Front and future prime minister of Iran. The movement to nationalize the oil industry was the reaction to the following concessions made by Iran to foreign powers: the Reuter concession of 1872, proceeding letter,D'Arcy Concession?] the 1933 agreement between the Iranian government and AIOC, and the Gas-golshaian[?] contract. According to the political scientist Mark J. Gasiorowski, the oil nationalization movement had two major results: the establishment of a democratic government and the pursuit of Iranian national sovereignty.

References

  1. "The Consortium Agreement of 1954".
  2. Kinzer, All the Shah's Men (2003), p. 110,
  3. Kinzer, All the Shah's Men (2003), p. 135-136.
  4. 1 2 "Iran Tells Oil Consortium Pact Will Not Be Renewed – Companies Dispute Legal Right of Shah to End Contract in 1979 Nationalized in 1951". New York Times. January 24, 1973. p. 51. Retrieved September 8, 2019.
  5. Cooper, Andrew. The Fall of Heaven. p. 79.
  6. Goodgame, Peter (11 August 2002). "The Globalists and the Islamists". Redmoonrising.
  7. "Iran Tells Oil Consortium Pact Will Not Be Renewed".