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 About NIOC |
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| NIOC at a Glance |
Our Centenary |
Our Resources |
Organization Chart |
Corporate Governance |
Directorates |
Subsidiaries |
Our History |
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NIOC at a Glance
Since 1951, National Iranian Oil Company (NIOC) has been directing and making policies for exploration, drilling, production, research and development, refining, distribution and export of oil, gas, petroleum products.
NIOC, with a vast amount of oil and gas resources, is one of the world’s largest oil companies. At the present time, it is estimated that the company holds 137 billion barrels of liquid hydrocarbons and 29 trillion cubic meters of natural gas.
With advances in technology and increasing complexities of economic and political relations, NIOC has risen to a privileged status. Therefore, national and regional policies and cooperation with industrial countries in the provision in the supply of energy and stabilizing global oil markets are on the agenda of NIOC. On the verge of the fourth decade of the Islamic Revolution, oil industry workers have every reason to be proud of their achievements before the noble people of Iran, and they pride themselves on having learned the lessons of self-assurance and dignity.
NIOC, in accordance with Article 44 of the Constitution, gives authority to different sectors, while supervising oil industry activities. The company has taken major steps toward establishing business enterprises, funded financial resources for development, helped to update technologies for exploration, drilling and production with reliance on the knowledge of Iranian experts.
NIOC consists of seventeen production companies, eight technical service companies, seven managements, six divisions (administrative units) and five organizational units. |
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Oil industry, for the time being, is the world\s most essential and powerful industry whose ever sky-rising monetary circulation in the world’s markets shocks every insider. Reaching oil resources has been the cause of many wars, coups, and massacres over a century. It has undoubtedly had a key role for superpowers in determining the world’s political borders after the first and the second World Wars. World’s nations are now of three types: “oil-rich exporters,” “oil consumers and buyers,” and “oil-rich consumers.” Oil and its products are essential in preparing short-term strategic plans and annual budget of every country in each of these categories. Even the world’s distinguished economic experts in international markets believe that oil itself plays a key role in countries’ destiny and economy.
Oil discovery in the late 19th century in Pennsylvania revolutionized the world’s economic, political, and social life. Oil giant companies, cartels, and terraces were established. They earned huge fortunes by investing and macro-policy making in oil business. Well-equipped with advanced military equipment, colonial diplomacy, and coercion, they looted third countries’ natural resources. We can still see the remnants of such invasions after a century; US presence in the Persian Gulf supports this claim. The traces of colonizers’ presence are quite clear in our country’s history. Oil Nationalization in 1953 and stopping the oil export made the Iranian King to leave the country. However, after a while the US-backed coup, staged on the 28th of Mordad, made the incumbent government to collapse. This paved the way for re-looting the country’s oil under the mask of the consortium. However, turning off the head gates, Iranian employees put an end to the looting during the Islamic Revolution.
Iranian oil industry began a hundred years ago, when oil was discovered in Masjed Soleiman for the first time, and it has survived and developed since then.
After a hundred years, we proudly celebrate the anniversary of the oil industry for we have managed to handle this industry using our own experts. We believed “we could do it,” so we could develop our expertise on sophisticated refinery equipment and penetrate deep into the oil and gas wells. We learned and handed our knowledge over to the next generation and we made the world believe that “we can do it” and that no malice action or sanction can stop Iranians. Waging the imposed war against us, our enemies believed they could stop us by targeting our oil facilities, bombing tankers, and blocking oil experts. Alas! They did not know that the more we are suppressed, the more we flourish, for Iranians do sacrifice themselves to safeguard their country. During the eight years of the holy war, we never let our enemies’ dream about blocking oil exports come true. We now proudly admit that we have managed to reconstruct our sophisticated facilities in the refineries, different offshore platforms, petrochemical plants, and drilling and production units, etc. self-dependently while receiving no help from foreign experts during the non-conventional war imposed against us.
We boast about the fact that Oil Ministry was the first Iranian ministry whose head, Tondguyan, bravely resisted against Iraqi forces, captured and tortured by them, and finally was martyred by the enemy. We have sacrificed over one thousand martyrs in the ministry to keep the oil industry safe and solid.
I hope we can move in line with our long-term, strategic plan by doing our best in world’s markets, discovering new oil and gas reserves, transferring technology, and awarding international tenders in oil, gas, and petrochemical industry.
Happy the hundred anniversary of oil industry to all Iranians, especially the hard-working employees in the oil industry, National Iranian Oil Company (NIOC), and all its affiliated companies. I am happy that we have a clear-cut strategic plan with which we can accelerate the development of the oil industry. We take on and fulfill our heavy responsibility in “the year of innovation and flourishment,” and do our best to safeguard the oil and gas industry and reserves to hand them over safe and sound to posterity. |
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Having 10% and 18% of the world's oil and gas reserves respectively, Iran was the Opec's second largest oil producer in the Iranian year (ending late March 2008). The country also enjoys an outstanding status in meeting the world's energy demands with a production capacity of over 4 million barrels of crude oil per day. It is expected that Iran will supply over 12% of the world's hydrocarbon productions by the next 20 years.
Possessing huge reserves of hydrocarbons, National Iranian Oil Company (NIOC) is considered as one of the world's giant oil companies. For the time being the in place oil and gas of the company are estimated over 137 billion barrels of crude oil and 28 trillion cubic meters of gas.
National Iranian Oil Company (NIOC) managed to increase 2,840 million barrels of crude oil, 1,045 billion cubic meters of gas, and 898 million barrels of NGL and condensates to the country's in place reserves by developing its explorations of 5 oil and gas fields in the year ending late March 2008.
Counting the new reserves discovered in the year ending late March 2008, the overall producible crude oil, condensates, NGL, and gas in the beginning of last Iranian year (starting March 21) was 137.62 billion barrels and 29.61 trillion cubic meters.
The overall reserves of natural gas and liquefied hydrocarbons are as follows:
Overall producible reserves
from 21 March 2004 to 21 March 2008
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description
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2004
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2005
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2006
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2007
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2008
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Crude oil, NGL, and condensates (billion barrels)
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132.74
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137.66
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136.16
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138.22
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137.62
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Finishing date of the country's crude oil and condensates based on production and lack of new reserves discovery in the year
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86
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87
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85
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85
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84
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Gas (trillion cubic meters)
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27.45
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26.85
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28.08
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28.13
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29.61
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Finishing date of the country's gas based on production and lack of new reserves discovery in the year
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199
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179
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177
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166
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160
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Country's reserves of hydrocarbons (billion barrels equivalent to crude oil)
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305
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306.63
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312.87
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315.2
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324
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The Organization Chart of NIOC
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Corporate Governance
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Full Name: Rostam Ghasemi
Position: Petroleum Minister and Chairman of the Board
Academic Degree: Civil Engineering
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Full Name: Ahmad Ghalehbani
Position: CEO of National Iranian Oil Company and Vice-chairman of the Board
Academic Degree: B.Sc. in Industrial Engineering from Sharif University of Technology (1978)
M.A. in Senior Executive Management (1991)
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Full Name: Alireza Zeyghami
Academic Degree: B.Sc. in Electrical Engineering
Position: Deputy Minister and NIORDC CEO
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Full Name: Hormoz Ghalavand
Academic Degree: MA in Chemistry Engineering: Hydrocarbon Reservoirs;
Position: CEO of National Iranian South Oilfield Company (NISOC)
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Full Name: Ahmad Vahid Dastdjerdi
Academic Degree: M.Sc in Industrial Engineering
Position: CEO of Pension Saving Welfare Founds
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Full Name: Vali-o-llah Ahmadvand
Academic Degree: PHD in Law
Position: Ministery Consultant in Legal and International Affairs
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Full Name: Mahdi Fakour
Academic Degree: CEO of Iranian Central Oil Fields Company
Position: M.Sc.. in Chemical Engineering with a specialization in Hydrocarbon Reservoirs
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Full Name: Abdolmohammad Delparish
Academic Degree: Petroleum Engineering from Petroleum University of Technology, Abadan
Position: Manager of Integrated Planning
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Full Name: Mohammad Ali Emadi
Academic Degree: PhD in Petroleum Engineering; and M.Sc. in Industrial Engineering from Surrey University, England
Position: Manager of Research and Technology
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Full Name: Mahmoud Reza Firoozmand
Academic Degree: PhD in Law of Energy Business
Position: Manager of Legal Affairs Division
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Legal Affairs
Mahmoud Reza Firouzmand
Responsibilities: this division participates in legal issues especially those related to signing contracts with local and foreign contractors in the oil industry, provides legal consultations on tax, custom, social security, etc.
Phone: +98 (21) 66152233, 66152871
Fax: +98 (21) 88944633
*****
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Research and Technology
Mohammad Ali Emadi
Responsibilities: this division’s purpose is to revitalize and optimize exploitation of oil and gas reservoirs across the country.
Phone: +98 (21) 888745006
Fax: +98 (21) 88661307
Email: info@nioc.rtd.ir
*****
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International Affairs
Seyed Mohsen Ghamsari
Responsibilities: this division is in charge of sales marketing and crude oil and petroleum exports and imports in various forms in global markets.
Phone: +98 (21) 61622211-13
Fax: +98 (21) 88945732
Email: info@nioc-intl.ir
*****
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Exploration
Seyed Mahmoud Mohades
Responsibilities: this division is in charge of planning, organizing and managing exploration operations for new sources of oil and gas across the country whether onshore or offshore.
Phone: +98 (21) 88604510-19
Fax: +98 (21) 88604550
Email: info@niocexp.ir
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Oil and Gas Production Supervisory
Amirmasoud Jabarirad
Responsibilities: this division is in charge of supervision of optimal production and distribution of crude oil, gas, gas liquids, condensates and other petroleum products.
Phone: +98 (21) 88802955
Fax: +98 (21) 88802957
Email: ogpc.mg@nioc.org
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Integrated Planning
Abdolmohammad Delparish
Responsibilities: it is the decision-making core and driving engine of NIOC. It has weighty responsibilities of identifying macro and strategic issues, setting goals, objectives, plans, and strategies in line with national laws.
Phone: +98 (21) 88946338
Fax: +98 (21) 88941406*****
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Human Resources
Abas Khanifar
Responsibilities: this division is responsible for safeguarding and developing human capital of the company.
Phone: +98 (21) 66153276, 66152597
Fax: +98 (21) 88941103
Email: khanifar@nioc.org
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Financial Affairs
Mahmoud Nikousokhan
Responsibilities: this division is responsible for standardizing financial processes, establishing administrative financial procedures, etc.
Phone: +98 (21) 66153338
Fax: +98 (21) 88943404
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-National Iranian South Oil Company-NISOC
Currently the company is active in a land area more than 400,000 km² with headquarter in Ahwaz and other nine subsidiaries. The company is producing about 80 percent of crude oil.
Tel: (+98) 611 4447094
Address: NISOC, Fadaeyane Islam St., Ahwaz, khouzestan, Iran
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-Iranian Fuel Conservation Organization -IFCO
It was established by the ministry of petroleum in 2000 in line with strategic energy policies with the objective of saving and optimizing energy consumption, protecting the environment, and making an efficient use of energy sources.
Tel: (+98) 21 88604760-6
Address: No. 23, East Daneshvar St., North Shiraz St., Molasadra St., Vanak Sq., Tehran, Iran
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Karoon Oil & Gas Production Company-KOGPC
Headquartered in Ahwaz, the company produces more than one million barrels of crude oil per day from 538 wells. Besides, the company delivers 650 mcfd of light natural gas to National Iranian Gas Company.
Tel: (+98) 611 4446464
Address: Karoon Oil & Gas Production Co., Karoon Industrial Zone, Ahwaz, Khouzestan, Iran
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-Naftiran Intertrade Company -NICO
The company was established in 1991 in Jersey Channel Island. Its activities include investment and trading activities, and providing finances through an active presence in global financial markets.
Tel: (+41) 21 3106565
Address: NICO Naftiran Intertrade Co. (NICO) Sàrl Av., de la Tour-Haldimand 6, 1009 Pully, Jersey Channel Islands, United Kingdom
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Petroleum Engineering & Development Company -PEDEC
The company is responsible for carrying out all engineering and development projects aimed at exploration, exploitation, and production of oil and gas resources including designing, engineering, construction, and implementation operations.
Tel: (+98) 21 88898650-60
Address: No.61, Shahid Kalantari St., Sepahbod Qarani Ave., Tehran, Iran
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-North Drilling Company -NDC
On 1999 the company was registered as an upstream company based on modern technology in order to create competitive opportunities in the continental shelf and the region’s market, and satisfy some of the country needs for complex drilling.
Tel: (+98) 21 88785083-8
Address: No. 8, 35th St., Alvand St., Argentine Sq., Tehran, Iran
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-Khazar Expl & Prod Co -KEPCO
The company was established as a production and exploration subsidiary following the increasing importance of the Caspian Sea and initial exploration studies in that region.
Tel: (+98) 21 88722430
Address: No. 19, 11th St., Khaled Eslamboli St., Tehran, Iran
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National Iranian Drilling Company -NIDC
It is one of the Middle East most trusted companies in the field of oil & gas wells drilling. Since its inception NIDC has always been the leading provider for both onshore and offshore drilling as well as related technical services and well control operations in the country.
Tel: (+98) 611 4440151
Address: National Iranian Drilling Company, Airport Sq., Pasdaran Blvd., Ahwaz, Khouzestan, Iran
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South Zagros Oil & Gas Production Company
It was established in 1998 and undertakes responsibility for providing natural gas to refineries, injecting natural gas, and also transferring gas liquids to different refineries. The company is also involved in various development projects.
Tel: (+98) 711 2138204
Address: South Zagros Oil & Gas Production Company, Parvaneh St., Karimkhan Zand Blvd., Shiraz, Iran
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Maroun Oil & Gas Company
It officially started its activities in 2000, and successfully obtained an IMS certificate for part of its facilities in 2004 and then for the whole company in 2006.
Tel: (+98) 611 4434073
Address: Maroun Oil & Gas Company, Ahwaz- Mahshahr Rd. (Km 12), Ahwaz, Khouzestan, Iran
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Iranian Off-shore Oil Company -IOOC
The objective underlying establishment of IOOC was to achieve an optimized production as well as safeguarding oil and gas reservoirs in the Persian Gulf, to increase the production rate and prevention of oil and gas migration.
Tel: (+98) 21 22664402
Address: NO. 38, Tooraj St., Vali-Asr Ave., Tehran, Iran
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Masjedsoleyman Oil & Gas Company -MOGC
The company started its independent activities in 1999 and currently produces 120,400 bpd of crude oil from 10 oil reservoirs. Meanwhile it produces 145.929 mcfd of natural gas from large Jurassic reservoirs.
Tel: (+98) 681 5 2228001
Address: Masjedsoleyman Oil & Gas Company HQ, Masjed Soleyman, Khouzestan, Iran
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Gachsaran Oil & Gas Production Company -GOGPC
The company is headquartered in Gachsaran. It owns 12 reservoirs in full operation and four reservoirs planned for future production. It mainly recovers oil from formations mostly formed of carbonate rocks in Asmari.
Tel: (+98) 742 2222581
Address: Gachsaran Oil & Gas Production Company HQ, Gachsaran, Kohkiluye-va-Boyer Ahmad, Iran
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Aghajari Oil & Gas Production Company-AOGPC
The company is located in Khuzestan province. It produces about 700,000 bpd of crude oil and provides light and heavy crude oil from eight oil fields to refineries as well as export terminals.
Tel: (+98) 611 914701, 914390, 914065
Address: Aghajari Oil & Gas Production Company (AOGPC), Naft Blvd,. Omidieh, Khouzestan, Iran
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Arvandan Oil & Gas Company -AOGC
The company is expected to be one of the most influential companies in value chain development by 2025. It is responsible for management and production of storage tanks, employing domestic technologies.
Tel: (+98) 632 4214021
Address: Arvandan Oil & Gas Company, Khamenei Ave., khoramshahr, Iran
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West Oil & Gas Production Company
The company started its operations in 2009 independently after being separated from Iranian Central Oil Fields Company. Currently the production capacity of the company is about 180,000 bpd.
Tel: (+98) 831 8370072
Address: No. 42, Zan Blvd., Naft Sq., Kermanshah, Iran
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East Oil & Gas Production Company -EOGPC
The company was established in 1998 and is based on Mashhad. It is in charge of providing natural gas for refineries and desalination plants.
Tel: (+98) 511 7633011
Address: No. 18, Payam 6 St., Payam Ave., Sheshsad Dastgah, Mashhad, Iran
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Pars Oil & Gas Company -POGC
The company was established in 1998. POGC’s mandate is the development of the South Pars gas field and North Pars gas field by utilizing modern management knowledge, tools and techniques as well as experienced seasoned managers, specialists and experts in the execution of oil and gas projects.
Tel: (+98) 21 88966031-40
Address: No. 1, Parvin Etesami Ave., Dr. Fatemi Ave., Tehran, Iran
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Iranian Oil Terminals Company -IOTC
It is a professional operating company which accepts delivery, stores and conducts quality analysis of crude oil, petroleum products, condensates for export and import.
Tel: (+98) 21 88732221
Address: No. 17, Beyhaghi St., Argentine sq., Tehran, Iran
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Pars Special Economic Energy Zone-PSEEZ
The company was established in 1998 for the utilization of South Pars oil and gas resources and encouraging commercial activities in the field of oil, gas and petrochemical industries.
Tel: (+98) 772 7376330
Address: Pars Special Economic Energy Zone Org., Assaluyeh, Boushehr, Iran
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Manufacturing Support & Procurement Kala Naft Company
The company was established in 1983 to provide facilities for oil and gas industry, with the objective of recognizing the capabilities of domestic manufacturers.
Tel: (+98) 21 88912231-46
Address: No.242, Shahid Kalantari St., Near Karimkhan Bridge, Sepahbod Gharani Ave., Tehran, Iran
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Iranian Drilling Services Company -IDSC
It was established in early 2004 and is located in Ahwaz. The company provides well-head and well work services and resolves problems with oil and gas production wells using modern technologies and equipment.
Tel: (+98) 611 2257666
Address: Iranian Drilling Services Company (IDSC), Fadaian Eslam, Ahwaz, Khouzestan, Iran
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Iranian Central Oil Fields Company -ICOFC
Iranian Central Oil Fields Company, established in 1999, is one of the five major production companies of NIOC. It is responsible for production of gas and oil through68 reservoirs including 43 gas fields and 25 oilfields.
Tel: (+98) 21 22018403
Address: No. 22, Esfandiar Ave., Niayesh Crossroad, Vali-asr Ave., Tehran, Iran
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Irans Oil History
Timeline
Photos
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Brief History of Iran Oil Nationalization
Preface
How was the first oil field in the Middle East region discovered?
Anglo–Iranian Oil Company (AIOC)
Export Operations in Iran Refinery
Disputes
Reza Khan and the oil issue
Cancellation of D’Arcy Concession and the Signing of the New Agreement
The Second World and Oil
Dr. Mohammad Mosaddegh and the Anti-Concession Law
Oil Nationalization
The Oil Nationalization Bill and the Government of Dr. Mohammad Mosaddegh
Unsuccessful Attempts at solving the oil issue
The Uprising of July 21st 1952
The Coup of August 19th 1953
The Consortium Agreement of 1954
Oil Bill and Company Agreements
Contracts of Service Contracts
Islamic Revolution of 1979 and Termination of the Contracts
Oil Industry after the Victory of the Islamic Revolution
Reconstruction and Development
Preface
Drilling job started in Iran in 1901 following the concession granted to William Knox D'arcy by Mozaffarol din- Shah of Qajar for production of crude oil across Iran- except in five northern provinces. Hence, Iran became the first country in the oil-rich Middle East region to start the oil operations.
crude oil across Iran- except in five northern provinces. Hence, Iran became the first country in the oil-rich Middle East region to start the oil operations.
Iran’s oil industry is now preparing to enter the second century of its life cycle.
Iran’s oil industry, as a technical and industrial phenomenon, opened the doors of the modern sciences for the Iranians in the past century. It also acted as a foundation for political, economic and social development of the country.
To examine each event, we need to take a look at what has been going on in the country in the past century.
Some of the events which have to be carefully studied are as follows:
Production of crude oil from the first well drilled in Masjed Soleiman field in 1908; construction of Abadan oil refinery in 1913; unsuccessful revision of the D'Arcy concession in 1933; oil nationalization in 1950 and finally inconclusive talks with a consortium of oil firms in 1945 which led to domination of foreigners on Iran’s oil reservoirs and the wasteful utilization of the country's oil resources in 1961.
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Victory of Irans Islamic revolution in 1979 put an end to some of the tragic events faced in the oil industry. It also led to replacement of foreign workforce with Iranian one in the industry.
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Following the heavy damages inflicted on the country’s oil industry during the eight-year Iran-Iraq war, the reconstruction job started to compensate for the damages.
How was the first oil field in the Middle East region discovered?
The notorious D'Arcy concession made on May 28th 1901 marked the foundation of Iran’s oil industry.
In the second half of the 19thcentury, when the U.S. oil industry came into existence (1859), several concessions were granted in Iran for the crude oil production. Numerous drilling operations were carried out in many parts of the country; however, none of them yielded satisfactory results.
The first stage of drilling operations, on the basis of D'Arcy's concession, was carried out in Ghasr-e-Shirin and Chah-Sorkh regions; however, they did not produce acceptable results.
The volume of oil production in the said regions failed to justify the continuation of operations there.
Therefore, drilling rigs were moved further south, to Shooshtar region.
Despite the optimism about the outcome of the drilling operations in the said region, D'Arcy's financial problems created some problems there. By 1904, he had spent some 220 thousand pounds, but further investment was needed for the drilling job in the region.
A Scottish firm active in Myanmar managed to resolve the problem. The firm was cooperating with Myanmar’s oil company and had built a refinery in the capital Rangoon.
The Scottish firm could not provide the needed crude oil demanded by the British admiralty because of its limited activity in Myanmar. Therefore, D’Arcy offered a better concession to the Scottish firm so as to persuade it to make investment in Iran.
The talks between D'Arcy and Myanmar’s oil company led to the establishment of the Concessions Ltd in 1905, the headquarters of which were located the Scottish capital, Glasgow. The said Scottish firm was supposed to undertake the drilling operations in Masjed Soleiman region, with the financial support of Myanmar’s oil company. To that end, the Company signed a contract with Bakhtiari tribal chief, based on which the tribe agreed to protect the Company's properties and installations in return for money.
The Iranian government never recognized the contract, which was negotiated by the British ambassador in the absence of the Iranian officials. Reza Shah abrogated the deal in 1924.
At the same time, drilling operations continued in several regions. Two wells drilled in north of Ahwaz did not produce favorable results.
A well drilled in Masjed Soleiman, however, produced oil on May 26th, 1908. The results of the tests were positive. Drilling of another two well in the field proved that the field contains a huge amount of crude oil reserves and therefore it was registered as the first oilfield of the Middle East region.
Surprisingly enough, Reynolds, head of the drilling operations, had received a letter on May 14th from the Company’s headquarters in Scotland. The letter was written less than two weeks before oil production in Masjed Soleiman, indicative of the disappointment of the Company’s authorities with operations. They had ordered Reynolds to stop the job and move the Company’s machinery and equipment to Khorramshahr in case oil could not be reached at 1500, 1000 and 1600 feet.
Anglo–Iranian Oil Company (AIOC)
A few months later, Myanmar’s oil company, the Concessions Ltd and Lord Strathcona, a British financier, set up AIOC. All of D’Arcy’s concessionary rights were transferred to AIOC. D’Arcy also became a member of the board of the newly established firm. Some steps had to be taken for the production and export of crude oil. It was decided that oil should be transferred to Abadan, where a refinery was to be built. Tankers were to carry oil products from there.
A 138-mile long pipeline was to be constructed for transferring the crude oil to Abadan refinery. Some plans were also raised for construction of a number of storage and loading facilities.
Sheikh Khazal, ruler of Khorramshahr, who had longstanding ties with Britain’s diplomatic representative in the Persian Gulf, provided AIOC with the needed site for construction of the refinery. In return, the Sheikh was to receive an annual lease and a loan of 10 thousand pounds. The British diplomatic representative also assured the Sheikh and his family of his government’s support and protection.
It was evident that AIOC was strengthening its position with the help of the British diplomatic officials, neglecting Iranian central government. The Company’s ties with Bakhtiari tribal heads and Sheikh Khazal were examples of such measures. But Reza Shah put an end to these ties by launching a crackdown on the sheikhs and tribal heads.
This situation lasted for 15 years. However, the previous ties were re-established more vigorously- after August 25th 1941, when the British military forces entered Iran.
Export Operations in Iran Refinery
Construction job began in October 1909. Company’s employees, initially limited to several drillers, mechanics, an accountant and a physician, rose to 2500 in 1911 and 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, 30 oil wells were drilled in Masjed Soleiman area. The Company and the British government reached an agreement in the same year whereby the latter became the majority shareholder of the Company.
From then on, the British government had two members on the Company’s board. They had special powers to veto the decisions made by the board which they thought were contrary to the British interest. The arrangement was approved by Britain’s House of Commons on June 17th 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 old times. All the awesome movement and firepower in today’s ground, sea and air combats are possible, only because of oil. Without it, personnel carriers, tanks, and fighter planes are not able to move. That is why after the First World War, Lord Curzon said that the war was won on waves of oil.
Disputes
Britain had come to appreciate the importance of the Iranian concession it had obtained through William Knox D’Arcy. This, however, did not cause either the Company or the British government to be grateful to Iran. On the contrary, their greed increased with the rising importance and value of oil. Although Iran had declared neutrality in WWI, the feuding parties turned Iranian territory into a warzone. Crude oil transfer from Masjed Soleiman to Abadan was interrupted by German inspired saboteurs, and the repair job took 5 months to complete.
Reza Khan and the oil issue
Reza Khan, who entered Iranian politics as a result of the 1921 coup d’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 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 arrangements that served the Company’s interests.
The government had banned workers from forming unions or voicing their objections. The first stoppage by southern oil workers occured in 1929. Living conditions of local workers were intolerable. The total number of oil industry’s workers was 30,000, out of which 6000 were British. Indian Government forces put an end to the strike and about 200 strikers were arrested.
Some of them were kept imprisoned until the culmination of Reza Shah’s rule.
A year after coronation, Reza Shah focused his attention on 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 they should solve the problem through negotiation.
Cancellation of D’Arcy Concession and the Signing of the New Agreement
The government appointed Teimoortash, the powerful court minister, as the chief negotiator with the Company. The government wanted an arrangement to give Iran 25% of the Company’s shares, a two Shillings royalty per ton of oil, return of ¾ of the concession area to Iran, payment of tax by the Company according to Iranian taxation rules and recognition of Iran’s rights in all of the Company operations even after the termination of the terms of concession.
Once those conditions were accepted, the government was ready to extend the agreement for another 20 years. Negotiations continued until 1931. In that year, Iran’s oil income plunged to 30 thousand pounds or a quarter of its revenue of 1.28 million pounds in the previous year. The Company blamed global recession for the fall in revenues. But Reza Shah, who was unhappy with lengthy negotiations and Company’s excuses, ordered his ministers to abolish the D’Arcy concession.
The Company was immediately informed of the Shah’s order, and the parliament (Majlis), endorsed his decision.
The British government strongly denounced the decision. Several warships were dispatched to the Persian Gulf, and a complaint was filed with the League of Nations. The Security Council, however, advised the two sides to find a solution to their problem through negotiations.
Iranian and Company representatives held their talks-first in Europe and then in Tehran-until April 24th 1933. They reached agreement on all principal matters, except the renewal of the D’Arcy Concession, which was to terminate in 1951; however, Cadman insisted that it should be extended for another 30-year period. Finally, the Shah himself intervened, and a new agreement was signed, which included the extension of the concession.
The Second World and Oil
The Second World War proved the ever rising importance of oil. Allied air forces in the Middle East, the Far East and Europe relied heavily on Abadan refinery for fuel. In August 1944, the former Soviet government sent its foreign minister to Tehran for an oil concession. The negative response of the Iranian government, which had decided not to grant concessions until the end of the war, enraged the Soviets, and the Tudeh (communists) Party held anti-government demonstrations and rallies across the country.
Dr. Mohammad Mosaddegh and the Anti-Concession Law
Meanwhile, Dr. Mohammad Mosaddegh took the anti-concession bill to the consultative assembly (Majlis). The bill was passed on December 2nd 1944. The Second World War came ended in 1949, and allied forces agreed to exit Iran in 6 months' time. The Soviets, however, enraged by the Iranian government’s response, did not abide by the agreement. Finally, the conclusion of “Ghavam-Sadchikov” agreement led to the withdrawal of Soviet forces from the country.
Oil Nationalization
Some of the major events that further heightened discussions on the oil issue were inclusive of election campaigns of the 16th Majlis, the assassination attempt against the Shah on February 4th of 1949, Ayatollah Kashani’s exile, assassination of Hajir by Fedayeen e-Islam on November 4th of 1950, the Iranian National Front’s success in Tehran and the return of Ayatollah Kashani form exile. Negotiations between the Iranian government and the Company led to the signing of the “Gass-Goldshaiyan” agreement. It was taken to the 14th Majlis in its final days.
According to the agreement, royalty earnings of the government were to increase, but the deal did not serve the rights of the Iranian people. This came at a time when agreements such as the 50/50 profit sharing had become prevalent.
The Oil Nationalization Bill and the Government of Dr. Mohammad Mosaddegh
Following the assassination of Razmara, Hossain Ala was given the task of forming a cabinet, while the wave of strike had swept oil workers in Khuzestan. Ala resigned on April 27th 1951 and the Majlis gave its vote of confidence to Dr. Mohammad Mosaddegh as the new Prime Minister. The oil nationalization law, prepared by the special oil committee, was approved by the legislative body on April 29th 1951. The Shah endorsed the bill on April 30th the same year. A day later, Mosaddegh’s cabinet presented its plans to the Majlis. As the first step in the oil nationalization process, the National Iranian Oil Company (NIOC) was formed with a three-member provisional board. The board members arrived in Abadan on June 9th 1951. The next day, Iran’s flag was mounted on top of the Company’s main office in Khorramshahr.
The board was ordered not to obstruct Iran’s oil exports. It had agreed that tankers should continue to lift oil cargos, in return for which they were to sign receipts, to allow for pavement at a later time. Oil tankers, which were either owned or leased by the Company, refused to sign unconditional receipts. Thus, oil lifting from Abadan came to a halt. Oil storage tanks were filled and Abadan refinery’s operations were also halted. In addition, 4500 non- Iranian oil personnel resigned collectively. At that time, some 61500 Iranian and foreign workers were working for the Company. Interruption of oil operations led to sharp decline in oil revenues, and forced the government to pay the salaries of the workers.
Unsuccessful Attempts at solving the oil issue
On June 10th 1951, when the provisional board was stationed in Khorramshahr, a mission headed by Basil Jackson (the deputy chairman of the Company) arrived in Iran, with proposals that were turned down because of contradictions with the oil nationalization law. The British government filed a complaint with the International Tribunal at The Hague. The Tribunal issued an interim ruling on the continuation of the operation of oil installations, calling on the Iranian government not to interfere in the Company’s affairs. Iran did not accept the ruling, because it did not recognize the court’s jurisdiction over the case.
Following the failure of the Jackson Mission, U.S. President Turman dispatched one of its senior advisors named “Harriman” to Tehran for mediation. Another mission headed by a British minister Stokes-arrived in Tehran at the same time. These talks also failed and Harriman left Tehran following Stokes. The British government, which had plans to use military force to occupy Khuzestan, dispatched its paratroopers to Cyprus and deployed several warships in Abadan waters. The U.S. opposed the move on fears of the Soviet intervention.
The Uprising of July 21st 1952
The widespread unrest forced Ghavam to stand down on July 21st 1952.This led Mosaddegh to become Prime Minister again. A month later, proposal of Churchill and Truman jointly raised a proposal to resolve the oil problem (August 27th 1952). The proposal was not accepted, because it was in violation of the principle of nationalization. Mosaddegh cut political ties with Britain to counter the British spies’ moves that had launched extensive operations under diplomatic cover.
The Coup of August 19th 1953
The United States’ ambassador left Tehran for Washington on May 30th 1953. In a meeting of CIA officials in Washington on June 25th 1953, the coup plan to overthrow Mosaddegh’s government was approved by the U.S. Secretary of State, Dulles. The U.S. President, Eisenhower, issued instructions for its implementation. Kermit Roosevelt, chief of CIA operations in Africa and the Middle East entered Iran through Iraq on July 19th with a counterfeit passport to implement the coup.
Based on a decree issued by the Shah, General Fazlollah Zahedi was appointed as the Prime Minister. The organizers of the coup arrested several ministers at midnight and Brigadier Nassiri headed a convoy of military trucks and personnel carriers to inform Mosaddegh of his dismissal. Mossaddegh, who had earlier learned of coup plan, challenged their actions and brigadier Nassiri was arrested. On August 16th, the government announced that the coup has failed. Then, the Shah fled to Baghdad on a private plane. Opposition to monarchy, which was strengthened by the Tudeh party activities, spread to all parts of the country. Organizers of the coup d’ etat, however, tried again and on August 19th took the control of government offices, set party centers on fire, and occupied radio centers of the army.
The message of the new Prime Minister was broadcast from the radio, and agents of the coup raided the residence of Mossaddegh using machine guns and tanks, and set it on fire. Mossaddegh and several of his friends, who had fled to a neighbor’s house, surrendered themselves to the military commander. After a controversial trial, Mossaddegh was exiled to Ahmadabad, where he died.
The Consortium Agreement of 1954
The coup government signed the Consortium Agreement in 1954. The Anglo-Iranian Oil Company (AIOC), which had then become British Petroleum, had 40 percent of the shares. Another 40% was owned by American oil companies. Of the remaining 20% of the shares, 14% went to ‘Royal Dutch-Shell’, and 6% to the French ‘CFP’. Financially, this agreement did not differ much from the other agreement signed in the Middle East, because Iran’s revenues would not exceed the 50% which was the basis in all of them. In addition to 10 million Pounds Sterling it received from Iran, as compensation for
compensation for Kermanashah refinery and domestic distribution facilities, the British Petroleum also obtained 214 million Pounds (600 million dollars) from its new partners. From Iran’s point of view, the contents of this agreement were much more unfavorable than conditions set forth several months earlier in the joint ‘Churchill-Eisenhower’ proposal to Dr. Mosaddegh. Iranian oil production in the first 3 years reached the pre-nationalization era level. From then on, production operations that were limited to Masjed Solaiman and Haftgel fields, were quickly expanded and covered the huge oilfields of Gachsaran, Ahwaz and Aghajarj.
Oil Bill and Company Agreements
In 1957, three years after signing of the Consortium Agreement, the first Iranian oil law was approved. It paved the way for the signing of agreements to carry out activities outside the area where the consortium operated, with the cooperation of foreign investors. The participation formula*, which was considered as an innovation at the time, triggered the dissatisfaction of major oil companies. They, however, gradually changed their attitude and found it a more proper approach to ensure continued cooperation with oil producing countries. Iranian participation agreements were 50/50 deals. 50 percent of the shares belonged to the National Iranian Oil Company and the remaining 50 percent went to foreign companies. Foreign partners paid half of their shares to the Iranian government as tax. As a result, those agreements came to be known as 75/25 deals.
Taxation plan was revised later on, based on which the foreign companies had to pay 85 percent of their shares as tax. Also, foreign partners were obliged to pay royalty to the National Iranian Oil Company.
Contracts of Service Contracts
The oil law passed in 1957, however, was revised in 1974. Consequently, the foreign companies could only make investments in the upstream oil sector including exploration, development and production operations, through service contracts. The law prohibited foreign firms to take part in the production and utilization phases. Based on the new law, foreign companies willing to sign a service contract had to accept the risks involved in exploration operations.
In other words, if operations were not commercial, the companies could not ask for reimbursement of the investment they had made. But if they reached oil, they had to hand over the discovered field to National Iranian Oil Company and reimburse the investment in 10-year installments and then deduct them from their payments for crude oil they purchased.
Islamic Revolution of 1979 and Termination of the Contracts
The consortium agreement of 1954 was revised in 1974 and a new agreement replaced it. Decisions made by the Organization of Petroleum Exporting Countries (OPEC) further restricted the operating companies.
Companies, which were granted concession, practically turned into service contractors of oil-exporting countries in the late 70s. Their tax payments had increased from 50 to 80% and their royalty payments from 12.5 to 20%. Oil prices were also set by the producing countries. Thus, foreign companies were left with just 22 cents per barrel.
These firms were supposed to undertake the treatment of some 300-thousand bpd of crude oil in Abadan refinery and export of products. In addition, they had to pay 40% of interest-free capital investments to NIOC, as down-payment for the crude oil produced. They were also obliged to provide NIOC with all of the needed technical services for a 5-year period. The Companies were facing problems in living up to their commitments because of the limitations imposed on them by OPEC’s decisions. The Consortium found it impossible to continue the job after the 1953 agreement, and called for resumption of negotiations on a new agreement.
The talks started in 1976 and continued until the victory of the Islamic Revolution of 1979, yielding no positive results. After the Islamic Revolution, National Iranian Oil Company terminated all of the contracts signed with foreign companies before the Revolution. This came following a decision made by the Council of Revolution in January 1979.
Oil Industry after the Victory of the Islamic Revolution
Following the exit of foreign oil companies from Iran, Iranian employees of the oil industry that had played a major role in the victory of the Islamic Revolution, undertook the management and operations of the industry including exploration, drilling, production, transportation, refining and exploration.
Despite doubts expressed by international experts, Iranian employees proved their capability and expertise in successfully running the affairs of Iran’s oil industry.
Following the start of the 8-year Iran-Iraq war on September 21st 1980, Iranian oil, gas and petrochemical facilities were targeted by Iraq.
The attacks were aimed at interrupting Iran’s oil production and distribution. Abadan refinery was demolished and other refineries were targeted many times.
Kharg Island and other oil export terminals were continually targeted by enemy fire. Despite such intense pressure, oil export did not halt even for a single day. Targeting oil wells and platforms marked a new period known as ‘Oil-Tankers War’.
Reconstruction and Development
Reconstruction job started after the end of the war. Refining, production and export capacities surpassed the pre-war era levels. Despite restrictions and sanctions imposed on Iran by the U.S. and its allies, the Ministry of Petroleum pursued oil industry development plans.
Oil industry development plans were based on 5 major approaches:
1- Expansion of the petrochemical industry, in light of its value-added products in global markets, and requirements of domestic downstream industries;
2- Giving priority to extension of the gas network to industrial centers, power plants, and the residential areas;
3- Making investments in the upstream sector of the oil industry, and executing exploration projects to strengthen Iran’s position as the second oil producer among OPEC member states, and as the world’s second holder of huge natural gas reserves. Discovery of giant fields of Azadegan, Tabnak, and Homa have been some of the results of such efforts;
4- Playing an active role in OPEC and other international organizations to help bring stability to world markets;
5- To secure financial resources required for development projects through buy-back contracts, as a practical approach to implementation of development projects, while placing emphasis on the utilization of domestic expertise and investment potentials, and the transfer of technology;
Some of the achievements of the Ministry of Petroleum in recent years are: Contracts signed for the development of the oil and gas fields including the 8 phases of South-Pars field; development of some offshore oil fields; absorption of foreign resources for exploration projects; increasing the production capacity of the petrochemical industry to 12 mt/y form 500-thousand t/y in per-Islamic Revolution era; raising the country’s crude oil refining capacity to 1.7 million bpd from nearly 700- thousand bpd; implementing various plans in “Petrochemical Economic Zone ” and “Pars Special Economic and Energy Zone”; expansion of the domestic gas consumption network to include 370 cities or 6.5 million households; dramatic rise in the number of high pressure pipelines and finally the unprecedented increase in gas processing and transfer levels.
In the international arena, the Ministry of Petroleum has pursued the objective of strengthening the status of OPEC through expansion of cooperation with OPEC member countries and other oil producing and importing nations.
Iran’s oil industry has had a unique performance after the Islamic Revolution, especially in recent years. The national oil industry is moving on with full strength and confidence, utilizing up-to-date technology, powerful and innovative management, highly skilled and creative manpower and a futuristic approach to development projects.
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