Text of 60-Year Lease On Iranian Oil (1901)
| Arash Norouzi |
In May 1901, British entrepeneur William Knox D’Arcy (1849-1917) signed a formal agreement with the government of Mozaffar ed-Din Shah for the exclusive right to potential oil deposits in Iran. By 1908, oil was struck and a new
enterprise, the Anglo-Persian Oil Company (APOC), was born. APOC later became the Anglo-Iranian Oil Company and finally BP (British Petroleum).
The D’Arcy Concession, as it is commonly known, altered the entire modern history of Iran, leading to the oil nationalization movement 50 years later. Except for the five northern provinces named in Article 6, it allowed for oil
extraction in the entire country.
The original text of the contract was in French, with translated versions in Persian and English. Presented here is the English version.
• Anglo-Iranian Oil Company (AIOC/BP) | Archive
• Iran Oil Consortium | Archive of Documents (1953-1954)
Petroleum Concession Granted by the Persian Government to William Knox D’Arcy May 28, 1901
Between the Government of His Imperial Majesty the Shah of Persia, of the one part, and William Knox D’arcy of independent means residing in London at No. 42 Grosvenor Square (hereinafter called “the Concessionnaire”) of the other part.
The following has by these presents been agreed on and arranged:—
ARTICLE 1.
The Government of His Imperial Majesty the Shah grants to the Concessionnaire by these presents a special and exclusive privilege to search for, obtain, exploit, develop, render suitable for trade, carry away and sell natural gas,
petroleum, asphalt and ozokerite throughout the whole extent of the Persian Empire for a term of 60 years as from the date of these presents.
ARTICLE 2.
This privilege shall comprise the exclusive right of laying the pipe lines necessary from the deposits where there may be found one or several of the said products up to the Persian Gulf, as well as the necessary distributing branches.
It shall also comprise the right of constructing and maintaining all and any wells, reservoirs, stations and pumps for accumulation and distribution, factories and other works and arrangements that may be deemed necessary.
ARTICLE 3.
The Imperial Persian Government grants gratuitously to the Concessionnaire all uncultivated lands belonging to the state which the Concessionaire’s engineers may deem necessary for the construction of the whole or any part of the
above-mentioned works.
As for cultivated lands belonging to the State, the Concessionnaire must purchase them at the fair and current price of the Province.
The Government also grants to the Concessionnaire the right to acquire all other lands or buildings necessary for the said purpose with the consent of the proprietors, upon such conditions as may be arranged between him and
them without their being allowed to surcharge the prices ordinarily asked for lands situated in their respective localities.
Holy places with all their dependencies within a radius of 200 Persian archines are formally excluded.
ARTICLE 4.
Three three petroleum wells situated at Shushtar and Qasr-e Shirin in the Province of Kermanshah and Dalaki near Bushehr are at present let to private persons and produce an annual revenue of two thousand toomans for the benefit of the
Government, it has been agreed that these three wells are included in the Concession, in conformity with Article 1, on condition that aside from the 16 per cent mentioned in Article 10, the Concessionnaire shall pay every year the fixed
sum of 2,000 (two thousand) toomans to the Imperial Government.
ARTICLE 5.
The location of the pipelines shall be fixed by the Concessionaire and his engineers.
ARTICLE 6.
Notwithstanding what is above set forth the privilege granted by these presents shall not extend to the Provinces of Azerbaijan, Gilan, Mazandaran, Astrabad and Khorassan but on the express condition that the Persian Government shall
not grant to any other person the right of constructing a pipe line to the southern rivers or to the South Coast of Persia.
ARTICLE 7.
All lands granted by these presents to the Concessionnaire or that may be acquired by him in the manner provided for in Articles 3 and 4 of these presents as also all products exported shall be free of all imposts and taxes during the
term of the present Concession.
All material and machinery necessary for the exploration, working and development of the deposits and for the construction and development of the pipe lines shall enter Persia free of all taxes and Customs duties.
ARTICLE 8.
The Concessionnaire shall immediately send to Persia and at his own cost one or several experts with a view to their exploring the region in which there exists, as he believes, the products mentioned, and in the event of the
expert’s report, in according to the opinion of the Concessionaire, the latter shall immediately send to Persia and at his own expense all the technical staff and required machinery for boring and sinking wells and ascertaining the
value of the property.
ARTICLE 9.
The Imperial Persian Government authorises the Concessionnaire to found one or several Companies for the working of the Concession.
The names, “statutes” and capital of the said Companies shall be fixed by the Concessionnaire and the Directors shall be chosen by him on the express condition that on the formation of each Company the Concessionnaire shall give
official notice of such formation to the Imperial Government through the medium of the Imperial Commissioner and shall forward the “statutes” with information as to the places at which such Company is to operate.
Such Company or Companies shall enjoy all the rights and privileges granted to the Concessionnaire but they must assume all his engagements and responsibilities..
ARTICLE 10.
It shall be stipulated in the contract between the Concessionnaire of the one part and the Company of the other part that the latter is within the of one month as from the date of the formation of the first exploitation Company to pay
the Imperial Persian Government the sum of £20,000 sterling in cash and an additional sum of £120,000 sterling in paid-up shares of the first Company founded by virtue of the foregoing Article. It shall also pay the said Government
annually a sum equal to 16 per cent. of the annual net profits of any Company or Companies that may be formed in accordance with the said Article.
ARTICLE 11.
The said Government shall be free to appoint an Imperial Commissioner who shall be consulted by the Concessionaire and the Directors of the Companies to be formed. He shall supply all and any useful information at his disposal and he
shall inform them of the best course to be adopted in the interest of the undertaking. He shall establish by agreement with the Concessionnaire such supervision as he may deem expedient to safeguard the interests of the Imperial
Government.
The aforesaid powers of the Imperial Commissioner shall be set forth in the “statutes” of the Companies to be created.
The Concessionnaire shall pay the Commissioner thus appointed an annual sum of £71,000 sterling for his services as from the date of the formation of the first Company.
ARTICLE 12.
The workmen employed in the service of the Company shall be subjects of His Imperial Majesty the Shah, except the technical staff such as the managers, engineers, borers and foremen.
ARTICLE 13.
At any place in which it may be proved that the inhabitants of the country now obtain petroleum for their own use, the Company must supply them gratuitously with the quantity of petroleum that they themselves got previously.
Such quantity shall be fixed according to their own declarations, subject to the supervision of the local authority.
ARTICLE 14.
The Imperial Government binds itself to take all and any necessary measures to secure the safety and the carrying out of the object of this Concession of the plant and of the apparatuses, of which mention is made, for the purposes of
the undertaking of the Company and to protect the representatives, agents and servants of the Company.
The Imperial Government having thus fulfilled its engagements, the Concessionnaire and the Companies created by him shall not have power, under any pretext whatever, to claim damages from the Persian Government.
ARTICLE 15.
On the expiration of the term of the present Concession, all materials, buildings and apparatuses then used by the Company for the exploitation of its industry shall become the property of the said Government, and the Company shall have
no right to any indemnity in this connexion.
ARTICLE 16.
If within the term of two years as from the present date the Concessionnaire shall not have established the first of the said Companies authorised by Article 9 of the present Agreement, the present Concession shall become null and void.
ARTICLE 17.
In the event of there arising between the parties to the present Concession any dispute or difference in respect of its interpretation or the rights or responsibilities of one or the other of the parties therefrom resulting, such
dispute or difference shall be submitted to two Arbitrators at Tehran, one of whom shall be named by each of the parties, and to an Umpire who shall be appointed by the Arbitrators before they proceed to arbitrate. The decision of the
Arbitrators, or in the event of the latter disagreeing, that of the Umpire shall be final.
ARTICLE 18.
This Act of Concession, made in duplicate, is written in the French language and translated into Persian with the same meaning.
But in the event of there being any dispute in relation to such meaning, the French text shall alone prevail.
Tehran, 9th Safar 1319 of the Hegira, that is to say, May 28th, 1901.
(Signed) WILLIAM KNOX D’ARCY
by his Attorney
(Signed) ALFRED L. MARRIOTT
Certified the above signature, etc.
(Signed) GEORGE GRAHAME
Vice-Consul.
Related links:
Text of Iran’s Oil Nationalization Law (March 20, 1951)
Iran’s Anti-Sabotage Bill to Protect Abadan Oil Plant (1951)
Winston Churchill | Campaign Speech on Iran Oil Crisis (Oct. 6, 1951)
MOSSADEGH t-shirts — “If I sit silently, I have sinned”
