The Abadan Oil Refinery Begins

The Abadan Oil Refinery's Beginnings

The Abadan Oil Refinery was the first refinery in the Middle East to refine oil in significant volumes. Construction began in 1910 and when it first began refining oil in 1912, it started with a refining capacity of 2,500 barrels per day.^[1]

Oil was first discovered in the Middle East when George Bernard Reynolds made a significant discovery in 1908. This first large oil discovery was made near the city of Masjed Soleiman in today's Khuzestan province. They had been searching for oil in the region since 1902 but had only found minimal amounts. Reynolds was hired by the British millionaire William Knox D'Arcy to prospect for oil. D'Arcy had signed an exclusive deal with the Persian Shah, Din Shah Qajar in 1901 to prospect for oil in Persia. This became known as the D'Arcy Concession.

How the Abadan Oil Refinery began - YouTube Short

After discovering oil in 1908, the Anglo-Persian Oil Company was started in 1909. The company was started as a subsidiary of the Burmah Oil Company and shares in the company were also sold to the general public. The Burmah Oil Company was founded in 1886 and was headquartered in Glasgow, Scotland. Unfortunately for Mr. D'Arcy, prospecting for oil in the region had used a substantial portion of his resources and by 1909 the Burmah Oil Company had purchased most of the exploration rights from the D'Arcy Concession. However, D'Arcy still owned a portion and this discovery made him a very wealthy man.^[2]

Abadan Oil Refinery Is Completed

After construction was completed in 1912, the refinery began ramping up and became fully operational in 1913.^[3] The refinery got off to a difficult start and was nearly bankrupt by 1914.^[4] But in June 1913, Winston Churchill, the First Lord of the Admiralty, sent a memo to the King's cabinet and recommended that Britain acquire dependable supplies of oil. In June 1914, the cabinet agreed and parliament passed a bill where Britain would acquire a 51 percent stake in the Anglo-Persian Oil Company, thus controlling the Abadan Oil Refinery. The agreement was mutually beneficial as it provided the Abadan Refinery with a consistent demand for its product and provided Britain with a trustworthy source of oil for its navy. For some additional context, the first British navy ship to be converted to oil was the HMS Spiteful which was built in 1899 and became fully oil-powered in 1904.

As World War I began, the Anglo-Persian Oil Company began to expand capacity at the refinery to meet the increased demand from the war. During World War I, the German struck a pipeline in the region and the British deployed military forces known as the South Persia Rifles to secure its oil supplies.

When World War I concluded, the relationship between Britain and Persia became complicated. In 1919, Britain attempted to convert Persia into a British Protectorate with the Anglo-Persian Agreement. This agreement didn't come to fruition but Britain behaved forcefully as if it had and in 1920, the Anglo-Persian Oil Company formed a new subsidiary called the North Persia Oil Company which was not a region of Persia that was included in the D'Arcy Concession. Rather than confront the British in Northern Persia, Persia courted American companies such as Standard Oil to come and explore the region, eventually granting them a concession rather than the British.^[5]

In 1951, the Abadan Oil Refinery was nationalized and today it is operated by the National Iranian Oil Refining and Distribution Company(NIORDC). Today, the Abadan Oil Refinery produces over 400,000 barrels of refined products per day.^[6]