The Royal Navy's Influence on the Development of the Iranian Oil Industry

With Iran’s oil exports constantly in the news these days, my readers might be interested to learn that the development of the Iranian oil industry came about thanks to the Royal Navy’s switch from steam to oil in the early 1900s. Indeed, the Admiralty persuaded the Treasury to save the embryonic Iranian oil industry by purchasing a stake in it.

The Royal Navy had decided to begin the change from steam to oil as it offered its battlecruisers an increased speed. Moreover, oil was easier to store than coal and could be replenished at sea. With this in mind, as early as 1905, the Admiralty concluded a contract for the supply of oil from Burmah Oil’s Rangoon refinery. When it heard that an Englishman, William Knox D’Arcy, had acquired a sixty-year concession to drill for oil over 500,000 square miles in Persia, but was short of funds to develop the oil fields, the Admiralty, fearing the concession might fall into foreign hands, persuaded Burmah (the Victorian spelling of today’s Myanmar) to invest in Persia and establish the Anglo-Persian Company (APOC). However, the oil proved costly to refine and transport and by 1912, Burmah was unwilling to finance the venture further. There was a very real prospect that the company would collapse.

Accordingly, in June 1913, Winston Churchill as First Lord of the Admiralty, persuaded the House of Commons that the Treasury should spend £2.2 million on a 51% stake in Persian oil fields in order to guarantee the supply of fuel oil to the Royal Navy. The House approved the bill within a day, the investment was duly made and a twenty-year contract negotiated. I suspect today’s Sea Lords are jealous of the influence their predecessors once held. APOC was to become British Petroleum in 1954.

In my novel, Now the Darkness Gathers, I have suggested that Germany tried to interfere with the negotiations, although I have found no evidence to suggest this was true, but as one says in the Navy, why spoil a good story with the truth? However, the other elements of my tale are true. Germany was very keen to foment trouble in the Near East and India, did supply Indian agitators with weapons and did send a delegation to Iran and Afghanistan with the objective of raising a holy war against the British. The central plot of John Buchan's famous novel, Greenmantle, was based on these true facts.

German delegation in Near East

Wilhelm Wassmuss, the leader of the German delegation