Oil companies are the first official multi-national corporations ….they represent the early beginning of “corporatism”.
The first oil power structures emerge from the US, UK, France, Germany and Turkey…. all colonial powers. Those are the first countries to drive their geopolitical interests in accordance to oil supplies and transport.
Why is Turkey on this list? Istanbul was the capital of the Ottoman Empire (1299 – 1922) at a time when the quest for Middle Eastern oil started. The Ottoman Empire covered many Middle Eastern oil fields and played an important role in terms of (1) allocation of oil concessions to private companies and (2) logistics (pipelines).
For thousands of years, pipelines have been constructed in various parts of the world to transport water for drinking and irrigation (Roman and Persian aqueducts for instance). The Chinese used bamboo pipes to transport natural gas to light Peking, as early as 400 BCE.
Pipelines are not merely an element of trade; they relate to geopolitics and international security. The construction, placement, and control of oil and gas pipelines are on top of the lists when it comes to state interests and actions.
The first oil pipeline was built in the US in the 1860s to connect a Pennsylvanian oil field to a railroad station (+/- 5 to 10 km long). The daily capacity was around 1.950 and 2.000 barrels of oil in 1865.
The pipelines were originally privately owned: Standard Oil controlled 80 percent of America’s oil transportation by the late 19th century. Even when governments are involved in the pipeline business, it’s still the private sector that takes decisions about building and investing in pipelines.
The transport cost of crude oil by pipeline in 2014 was around $5 per barrel, while rail transport was around $10 to $15 per barrel. Trucking is even more expensive due to the additional labor costs.
The Emergence of Oil Domination
The role of oil becomes visible before and during WWI. The Great War will also accelerate the consolidation of oil corporations.
In 1903, the Wright brothers accomplish the first flight with an oil engine. Some people may say that this was the Eureka moment for oil and that it “probably” marks the beginning of the domination of oil as leading energy source replacing the existing coal steam engines.
Another historic “geopolitical” milestone that shook up the Middle Eastern power equation happened when Germany signed a strategic deal with the Ottoman Empire. Some may argue that the Ottoman Empire signed its death warrant at the same time because the end of WWI marks the end of the Ottoman Empire who would evolve into a smaller but more industrially minded modern-day Turkey.
There were two importants elements emanating from this German-Ottoman deal: (1) colonial ambitions and (2) oil.
(1) Germany agrees to give up its colonial ambitions in the Ottoman Empire. The extremities of the Ottoman Empire (Egypt, Lybia, the Balkans) had already been taken away by other powers. In short, Germany came with a clean sheet and they were willing to give up their colonial ambitions in the region.
(2) Germany starts building the Berlin-Baghdad railway in 1903. In 1904, a concession was signed giving the oil found around the railway to Deutsche Bank. This explains why the “railway to nowhere” will be drawn around the most “oil” promising regions which was Mosul (Iraq) at that time.
Another important milestone for oil domination is the official switch in 1912 from coal steam engines to oil powered engines by the Royal Navy (UK).
The switch from coal to fuel brings a fundamental problem for European powers: there’s a lot of coal in Europe but there are no known oil supplies with the exception of the Carpathian mountains (Eastern and Central Europe).
European powers needed to find “black gold” supplies and were ready to go to war for it. The Middle East becomes the center of attention.
Concessions close to the Persian Gulf had been granted by the Shah of Iran to a Brit named William Knox D’arcy.
The Germans start to build a railway to the Middle Eastern oil ressources to build a port in the Persian Gulf, the Baghdad or Berlin–Baghdad railway only to be finished in 1940. The deal was that the oil found around the railway would become property of Deutsche Bank so the Germans carefully drawn the railway around the oil ressources. Oil would become the driver of the German-Ottoman connections. When the Germans got involved into oil digging in the Ottoman Empire, the US, UK and French ambassador in Istanbul protested and attempted to stop this. Oil became a reason for war.
Brothers Wright accomplish first flight with an oil engine. The evidence of the role of oil becomes even more clear during World War I.
Oil is discovered in Iran.
The Anglo Persian Oil Company (APOC) was founded. It was renamed the “Anglo-Iranian Oil Company” in 1935 and changed its name to the “British Petroleum Company” (BP) in 1954.
Shell lobbied against Standard Oil by lobbying against it’s expansion into the Dutch-controlled Indonesia; the beginning of “corporate” lobbying.
Standard Oil breaks up into smaller structures.
A British company known as “African and Eastern Concession Ltd” was formed as an attempt to bring together competing British and German interests in the Ottoman region.
The ” African and Eastern Concession Ltd” became the “Turkish Petroleum Company ” (TPC). TPC bought English and German concessions. TPC became an alliance of Shell, APOC (BP) and Deutsch Bank. All these companies agreed that none of them would seek oil within the confines of the Ottoman Empire except through TPC.
TPC signs a concession with the Ottoman Empire to explore the most oil promising regions around Mosul.
William Knox D’Arcy and Charles Greenway (APOC CEO) tricked the British government into purchasing 51 % of APOC by threatening to sell out to Shell. Shell was then an obscure company with and Anglo-Dutch ownership structure that was secretly controlled by the Germans according to Charles Greenway. It was Churchill, then Minister of the Colonies who struck this “APOC deal”. Some may argue that this was the beginning of the “corporatisation” of colonial ressources and that this deal gave Churchill a “laisser passer” from the Oil dynasties to become the UK PM during WWII.
WWI starts on 28th of June.
Standard Oil and Shell would supply American and Mexican Oil to the Allied powers during the war.
64 % of world production came from US, 16 % Russia, Mexico 7% and Romania 3%.
The US Oil empire was driven by J. Rockefeller with the Standard Oil company. The Gulf of Mexico was the biggest producer before World War I but power switches to the Persian Gulf after World War II. The transition happens between the two wars. The Persian Gulf would be called the Arabian Gulf around the 1960s.
The secret Anglo-French “Sykes-Picot Agreement” is signed and France receives the oil rich region of Mosul.
Thanks to their alliance with the Ottoman Empire, the Germans had a laissez passer to dig for oil in the region. The German Brennstoff Kommando Arabien start digging the first modern oil wells in the region and hit the jackpot in Mosul (now Iraq) in December 1917.
Shell creates a phoney oil supply crisis by exaggerating the effects of German submarines on transatlantic tankers. Shell claimed falsely that France would run out of oil and convinced French PM Clemenceau to lobby US President Wilson to force Standard oil to move its tankers from the Pacific to the Atlantic… to protect Shell’s ambition on the Asian markets.
World War I ends with an armistice agreement (11th of November). French PM Clemenceau accepts to abandon his claims on oil-rich Mosul at the request of UK PM David Lloyd George.
Treaty of Versailles is signed and Deutsche Bank is stripped of its 25 % in TPC. The British Government gives this 25 % to the French. Two remarkable quotes from French PM Clemenceau at that time suggested a certain (1) ignorance and (2) opportunism from the French politician: “When I want some oil, I go to my grocer” and “A drop of oil is worth a drop of blood“.
Standard Oil launched the “Oil War” public relation campaign that accused the British to conspire for world domination through an oil “octopus”. The campaign led to the US “Open Door” doctrine: the freedom to invest one’s capital anywhere in the world (the beginning of the liberal globalisation doctrine). Eventually, APOC was forced to allow the Americans into TPC and to exploit Iranian oil. However, it took a bit longer to define the practical terms of this agreement.
The first outcry from Iraqi locals that oil companies (TPC) are interfering with the administration of their country.
The French decide to allocate their 25 % share in TPC to a new company called “Companie Francaise des Petroles” (CFP). The CFP helped oil companies to acquire land and would change its name to “Total” (now TotalEnergies) after World War 2.
The terms of the “Americans in TPC” deal was struck with the “Red Line Agreements” that referred to the line delineating the vast area within which TPC partners agreed to collaborate.
Distrust from local populations against TPC grows. Ibn Saud awards the oil concession of his newly established country (Saudi Arabia) to an all-American company. American oil executives ensured that US would become a firm Saudi ally.
TPC went slow to build the pipelines to avoid oversupply to keep oil prices high. The TPC kartel also kept the royalties for Iraq and its neighbours very low. Mosul’s oil destined for Europe finally reached the TPC’s Mediterranean terminal at Haifa (Palestine) in 1934 .
Palestine, Israel and Oil Terminals
You’ve heard of the expression …. A picture is worth a thousand words. Well, if I had to choose one picture for this article, it would be the following one:
Just look at this picture. It’s a bright sunny day … a day to walk on the beach. However, if you look closely nobody wears a swimming suite and nobody is swimming …. because it’s all about oil.
Look at the details of the picture. There’s a single white umbrella on the left of the picture with an empty chair under it…. I wonder for whom it was? Was it for the man with his white shirt walking on the pipeline? There’s also a ship on the horizon and there are cars parked close to the sea …
This is the end of the TPC “Kirkuk–Haifa” oil pipeline (also known as the Iraq–Haifa pipeline or Mediterranean pipeline) in Haifa in 1938. The pipeline was 942 km long and operational from 1935 to 1948. At that time, Haifa was a city located in a country called Palestine which would become Israel in …. 1948.
Besides the “religious” rhetoric to choose the location of the new state of Israel, one may argue that there was a geopolitical element to it.
It may not be a pure coincidence that Palestine was chosen as the location for the new state of Israel as the region played an important role in terms of logistics for the oil destined for European markets … as one may over simplify it; it would have been the perfect location to set up a Western military basis to control Middle Eastern oil terminals.
Oil is not and end on itself; it’s a mean to attain progress. Progress, economically speaking, is often related to the desire to create wealth … personal or individual wealth.
Oil represents money, wealth and power, but it’s also energy and energy is the feedstock of civilisations.
One should differentiate between oil and oil companies. We may point our finger at oil and blame it for all its wrongdoing, but at the end of the day it’s just fossilised liquid carbon.
One may agree that the current geo political and economical situation in the Middle East has been defined by “corporate” oil concerns.
But the “hell” road to oil “heaven” wasn’t an easy walk in the park …. it may have been what people refer to as a conspiracy for world domination.
Poor people call it a “conspiracy”. Rich people and corporations call it an “agenda”. But which one is it? I think that when someone dies of a non-natural death because of it, the agenda ceases to be an agenda and becomes a conspiracy.
Today’s politicians want to cut off the head of … ze “Fossil” God …. well, just be careful not to collapse the whole geopolitical “house of cards” in the same time.
The creation of fossil corporate monsters gave rise to oil dynasties and families and their (private) geopolitical interests emerged at the forefront of WWI.
The “corporatisation” of the oil industry represents the end of the colonial exploitation under “the empire” stamp to make place for the “corporate” branding.
World War I saw the end of the “Austro Hungarian Empire” and the “Ottoman Empire”. World War II saw the end of the “British Empire” and the “Third Reich” and …. the emergence of the “American Empire”.
Some may say that the Americans were able to attain world domination by controlling the Middle Eastern oil reserves … well, that’s OK as long as the “agenda” doesn’t become a “conspiracy” again.
I visited an exposition called “For Civilisation – The First World War in the Middle East 1914-1923” at the “In Flanders Field Museum” of Ypres (Belgium). The city of Ypres was famously known for its role during the Great War. I purchased the book “For Civilisation – The First World War in the Middle East 1914-1923” written by Pieter Trogh and edited by “Tijdsbeeld” and it inspired me to write and it provided most of the info in this article.
Oil Companies First Built Pipelines in the 1860s; They’ve Been Contested Ever Since