The Modern Oil Industry in Iran: A Historical Perspective and Review

The production of petroleum substances has a long historical tradition in Iran. Glance (1970) reported that the “first man‐made oil well was dug” in the ancient city of Susa (present‐day Shush), about 40 km northwest of Ahwaz, in 500 BC during the reign of the Achaemenid emperor Darius I. Writing in the fifth century BC, Herodotus described petroleum production near a place called Ardericca, probably present‐day Masjed Soleyman, located 210 furlongs from Susa (Lees, 1950). The petroleum substances produced included bitumen which was used in construction and the waterproofing of ships. Sorkhabi (2005) detailed the petroleum history in Iran during ancient and medieval times. The modern quest for oil in Iran dates from the second half of the 19th century. From a historical perspective, this modern period can be divided into six distinct phases: (i) The early years, 1872–1900; (ii) The Anglo‐Persian years, 1901–1932; (iii) The Anglo‐Iranian Years and Nationalization, 1933–1953; (iv) The second Pahlavi years, 1954–1978 including the rise of OPEC; (v) The Islamic Revolution and Iran‐Iraq War, 1979–1989; and (vi) Buyback Contracts and US Sanctions, 1990–Present. The search for oil was singularly unsuccessful during the first of these phases and the early years of the second phase. However, after a difficult six‐year exploration campaign, oil in commercial quantities was struck in the early hours of 26 May, 1908 at Maidan‐e Naftun, which in later years achieved world fame as the Masjed Soleyman oil field. Since then, more than 120 oil and gas field discoveries have been made in Iran's onshore areas and its territorial waters in the Persian Gulf. The story of oil has always been an emotive and politically charged issue in Iran and has been the focus of great national interest and debate for over a century. Certainly, the discovery in 1908 marked a milestone in Iran's 20th century history: it ushered in a new era – an era not only of progress and prosperity, but also of social and political upheaval and turmoil that has not yet ended (Ala, 2007). In this paper, important events in each of the historical phases identified above are briefly reviewed. Emphasis is placed on the emergence of the modern petroleum industry in Iran, and the early phases are covered in particular detail.