Comment by Hilift | Hacker News Reader

Comment by Hilift | Hacker News Reader

Hard to believe Churchill was one of the early developers of that field. Fascinating history.

"In 1913, shortly before World War I, APOC managers negotiated with a new customer, Winston Churchill, who was then First Lord of the Admiralty. Churchill, as a part of a three-year expansion program, sought to modernise Britain's Royal Navy by abandoning the use of coal-fired steamships and adopting oil as fuel..."

"Persian popular opposition to the D'Arcy oil concession and royalty terms whereby Persia only received 16% of net profits was widespread."

"By the end of April 1933, a new agreement was finally forged. The concession area was reduced by three-quarters. Persia was guaranteed a fixed royalty of four shillings per ton, which protected it against fluctuations in oil prices. At the same time, it would receive 20 percent of the company's worldwide profits that were actually distributed to shareholders above a certain minimum sum. In addition, a minimum annual payment of £750,000, irrespective of other developments, was guaranteed."

"Truman and US ambassador to Iran Henry F. Grady opposed intervention in Iran but needed Britain's support for the Korean War."

"BP was incorporated in London in 1954 as a holding company called Iranian Oil Participants Ltd (IOP).[41][42] The founding members of IOP included British Petroleum (40%), Gulf Oil (8%), Royal Dutch Shell (14%), and Compagnie Française des Pétroles (now TotalEnergies SE, 6%). The four Aramco partners — Standard Oil of California (SoCal, later Chevron), Standard Oil of New Jersey (later Exxon), Standard Oil Co. of New York (later Mobil), and Texaco – each held an 8% stake in the holding company.[41][43] In addition, these companies paid Anglo-Iranian about $90 million for their 60 percent share in the consortium, and a further $500 million, paid out of a ten cent per barrel royalty. The Shah signed the agreement on 29 October 1954, and oil flowed from Abadan the next day. Within a few months each of the American companies contributed 1 percent to Iricon, a consortium made up of nine independent American companies, which included Phillips, Richfield, Standard of Ohio, and Ashland."

https://en.wikipedia.org/wiki/Anglo-Persian_Oil_Company

The history of oil development is so poorly known in the Arab world. The prevailing view is “the British came in and took our oil.” But everyone overlooks that the Arab countries had never developed the mechanical technology to really extract it except the portion that came near the surface.

One does not need to develop the tech to own the oil and monetize it. Those who developed the tech can be hired.

Your options are limited when you have none of the tech stack to find the oil, development fields, and extract the oil. Nor the capital to buy the equipment and do it all yourself.

Theoretically, book authors could “hire” everyone needed to turn a popular book into a movie. But in practice they sell the rights to develop the property to a studio in return for a cut of the profits.

Finding the oil fields was often easy. The soil was oily to the touch. The Arabs were using the oil for lamps for a while (think Aladdin’s lamp).

Aladdin's lamp would have been an olive-oil lamp. Flammable vapor lamps are comparatively modern.

Before the Renaissance, rock-oil/petroleum was used mostly for waterproofing as tar, with a few other medicinal and military uses.

Highly doubt it was olive oil. But naphta was used as wicks for lanterns and oil and natural gas were burned thousands of years ago.

The real point is not what the oil was used for, but that the oil fields were not particularly hard to find.

From Alexander the Great to Al Masudi, there are plenty of records of oil pools and puddles throughout Persia and Arabia

https://archive.aramcoworld.com/issue/199505/land.of.the.nap...

https://www.cyberistan.org/islamic/islmoil1.html

The British company that first found oil in Iran nearly ran out of money before finding it. In the middle east some oil comes to the surface, and in fact the Muslim world invented distillation in the middle ages. But finding sources to support a commercial oil field is another matter.

There is a difference in the way it went for Saudis and Iranians. Saudis, not having the tech, capital, knowledge at the time, still retained ownership. Iranians did not. Saudis had enough bargaining power (and balls), Iranian Shakh agreed to exploitative concessions.

Those who had the tech, capital and expertise in the end just lined up in front of Saudis to be hired.

It also requires significant capital investment on top of whatever it takes to hire them. The equipment isn't cheap, and the entire stack of knowledge you need to hire in spiders out significantly, and with the lack of experience likely would take a long time to truly fill all the knowledge gaps. It may not be obvious what you're lacking until you start hitting walls.

Bootstrapping via external investors experienced in the sector is way faster, but comes with costs, as shown in the deals here. But that's true in every market.

That's essentially what happened. Good luck negotiating when it is well known that if you don't get a deal, you'll get $0. Whereas those with oil expertise can easily go to other potentially productive oil fields.

Back then they wouldn't have had lateral drilling abilities. Otherwise, they'd just sit in their space taking your oil before you even knew you had oil

They didn't have anything - not just the mechanical technology, the talent, the market, the capital, infrastructure or the use case.

Crude oil was developed as therapy to treat arthiritic along the Caspian sea.

> The history of oil development is so poorly known in the Arab world.

Comment you replied to is talking about the history of the Anglo-Persian Oil Company. Iran is outside the Arab world.

It's difficult to come up with a comprehensive name that encompasses the oil-rich lands within eastern / middle-eastern / central Asia, north Africa, and south-eastern Europe.

I'm strongly reminded of Peter Adamson's Google Lecture on philosophy in the Islamic World, which is almost entirely dedicated to the matter of why he calls it the Islamic World, rather than Arabic, Persian, Islam, or several other possible names.

Ideas are maps, and here the map fits the terrain fairly poorly. Any term is going to have its inaccuracies, and will inflate or neglect one or more parties.

Ultimately, though, that specific matter is of very limited interest or discussion potential.

Resource cursed countries?

That too, but there's the geographical continuity which spans continents (at least as we generally classify them), cultures, language, and religion.

Resource curse isn't oil specific, and you might include some remote outliers into that group as well: Venezuela, Mexico, Brazil, and Nigeria, for example, all oil producers, and numerous others throughout the world based on other natural resources, with Nauru being perhaps the most spectacular boom-bust case.

The question of how / why / whether the US avoided the resource curse is another interesting one. I'd argue that it's similar to the case of the UK, in that 1) energy resources and industrialisation arose more-or-less simultaneously, 2) in a world with no industrial rivals and 3) with a fairly wide regional variance in both. In the case of the US, industry settled largely in the Great Lakes / North-East regions, whilst energy was focused in Texas, Oklahoma, and Louisiana. The latter three far more resemble resource-cursed countries in their economic, political, and socioeconomic profiles, though much of that is tied up in ... other historical baggage, to avoid taking this thread entirely off the rails ;-)

> The prevailing view is “the British came in and took our oil.”

No one thinks that in Saudi Arabia, because it is not remotely true.

No, in Saudia Arabia, it was the Americans.

Editing/Updating to note: yes, the British were involved, somewhat, but for various reasons the UK had a far greater influence in Persia, and the US in Saudi Arabia, particularly following the Great Bitter Lake meeting between Kind Saud and FDR, very shortly before the latter's death, during WWII.

<https://en.wikipedia.org/wiki/History_of_the_oil_industry_in...>

(Also covered in The Prize which is mentioned by myself and others elsewhere in this thread.)

For anyone interested in learning that history, I cannot recommend highly enough Daniel Yergin's book The Prize (1990), and its companion PBS series of the same title (1992).

<https://en.wikipedia.org/wiki/The_Prize:_The_Epic_Quest_for_...>

That recommendation comes despite the fact that Yergin is an unapologetic booster of the petroleum industry. The simple fact is that he's written an exquisitely researched and detailed history of oil in the 19th and 20th centuries, and the tremendous changes it produced. This includes ample coverage of oil development throughout the Middle-East and North Africa (and of course, elsewhere).

Thanks!

Another interesting tidbit: https://russia-islworld.ru/en/kultura/karim-hakimov-red-pash...

In 1930-s there was a chance for Saudi Arabia to become close with the USSR. It had diplomatic relations and wanted assistance from the USSR, in particular in obtaining enough fuel.

fascinating, the time when USSR repressions impressed even Saudis (by watching for example Lawrence of Arabia one can see that life there was a complete opposite of a cake walk) :

"one year later he was recalled to Moscow where he was arrested one year later on the false denunciation. On the 10th of January in 1938 Red Pasha was cut short. Repressions of «Red Pasha» and the follow-up execution made a great impression on representatives of the ruling till now dynasty of the Saudi Arabia Kingdom – diplomatic relations between that country and the USSR were broken off in 1938 after Khakimov’s withdrawal and they were not resumed till the fall of the communist system in the Soviet Union."

Churchill's role in expanding the role of oil was in fact profound. It's another fact I'd learned in Yergin's The Prize (mentioned elsewhere in this thread).

Britain was a naval power, and in the early 20th century was rich in several factors that served as a basis for that, including iron and coal, as well as access (through trade) to the essentials of munitions manufacture (saltpetre, an ingredient in gunpowder and other propellants, was abundant in India).

But coal-fired ships were cumbersome to manage: solid coal had to be physically handled when fueling ships initially, in re-bunkering coal as it was consumed in transit, and of course, being shoveled into the boilers themselves.

Petroleum, by contrast, flowed through pipes, by gravity or with the assistance of pumps. Fueling, bunkering, and operational procedures were streamlined remarkably. Ships also gained vastly greater performance flexibility: direct-combustion engines (diesel or turbine) could be powered up or down in seconds, rather than the many minutes or hours to increase steam-based output. And of course petroleum enabled the two great 20th century advances in naval power: submarines and aircraft, of which the technological history of coal-fired variants is brief.

(Not non-existant, however. The British Navy deployed K-Class submarines, coal powered, in WWI, and the Germans experimented with a coal-dust burning airplane in WWII, see <https://en.wikipedia.org/wiki/British_K-class_submarine> and <https://en.wikipedia.org/wiki/Lippisch_P.13a>.)

Britain's problem in 1913 however was that the country had no domestic oil production capacity. (The North Sea oil fields wouldn't be proven and developed until the 1960s.) Switching from (domestic) coal to (foreign) oil was a tremendous gamble, and required sea-lane control to the Middle East, as well as control of the Suez Canal for greatly-reduced shipping costs.

The story of oil in both World Wars is probably the most fascinating aspect of Yergin's book. WWI in particular started with cavalry charges and horsecarts, and ended with tanks, submarines, and bombers. During WWII, a critical element in the Allied invasion of mainland Europe was the establishment of an oil pipeline, in Operation Pluto, initially consisting of a single two inch diameter cross-channel pipe. Through those two inches flowed the material which made mechanised invasion possible.

<https://en.wikipedia.org/wiki/Operation_Pluto>

(Appropriation of German "Jerry Cans" --- Wehrmacht-Einheitskanister to its creators --- was also a huge strategic gain. <https://en.wikipedia.org/wiki/Jerrycan>)

The UK was in a really interesting position. The British empire was the largest in history, and it occurred during a time of great advancement during the industrial revolution. Liquid fuel wasn't new. The owner of two of the three ships holding 90k lbs of tea in the Boston Tea Party, Joseph Rotch (1704–1784), held a monopoly on whale oil. His existence was probably illustrative and educational for those who followed in railroads and petroleum.

Churchill did not know it at the time, but he was the peak of the empire. Physically the empire was untenable, but in business there was a new world of influence. I sometimes compare early Churchill to the business adventures of Averill Harriman and Prescott Bush.

https://nha.org/research/nantucket-history/history-topics/ro...

Liquid fuel wasn't new (the etymology of "oil" is olive oil, in use for literally thousands of years <https://www.etymonline.com/word/oil>), but cheap, abundant, geologically-sourced liquid fuels were.

Whale oil may have been big business in the 18th century, but the entire history of whale-hunting produced the equivalent of a few days of present petroleum extraction in terms of fuel.

Oh, and Whale hunting did in fact continue through the 20th century, petroleum didn't save the whales, as has been discussed here: <https://edconway.substack.com/p/no-kerosene-did-not-save-the...> <https://news.ycombinator.com/item?id=43584303> (April 2025). Aristotle Onasis, whom I've already mentioned in this thread, not only owned oil tankers and supertankers, but built some of the largest whaling ships ever commissioned, specifically to hunt blue whales:

<https://www.greece.org/poseidon/work/modern-times/onassis.ht...>

<https://en.wikipedia.org/wiki/Aristotle_Onassis#Whaling>

I'm not entirely sure what Churhill knew or when, but the British Empire was already creaking (along with much of the rest of the 19th-century European political establishment) even before the onset of WWI (and was in fact a major contributing factor to that war), and was obviously weakened and foundering prior to WWII, which was the coup de grâce.

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