Anglo-Iranian Oil Company’s Ad (Nov. 1951)
| Arash Norouzi The Mossadegh Project | March 6, 2025 |
The Anglo-Iranian Oil Company placed the following advertisement in British, Canadian and Australian newspapers and shipping trade journals in November and December 1951.
The British-owned installations in Abadan were nationalized in April, leading to a heated diplomatic confrontation between the two nations. British oil workers evacuated in early October, as the matter was brought before the United
Nations Security Council.
To make up for the loss of Iranian oil, AIOC increased production in its other worldwide refineries in Europe, Australia and the Middle East.
• Anglo-Iranian Oil Company (AIOC/BP) | Archive
• International Court of Justice | Iran Archive
ANGLO-IRANIAN OIL COMPANY
First Full Statement On Situation In Iran
Categorical Denial Of False Accusations
Sir William Fraser On Current Developments
The 42nd annual general meeting of the Anglo-Iranian Oil Company Ltd., was held on December 20, at the Chartered Insurance Institute, 20 Aldermanbury, London, E.C.
The following is an extract from the statement to stockholders by the Chairman, Sir William Fraser, C.B.E., which has been circulated with the report and accounts for the year ended December 31, 1950:
The group trading profit is £81,300,622, which is the highest ever achieved. This compares with last year’s profit of £38,666,485 and is after provision or £34,195,372 for depreciation on fixed assets, oil exploration interests, and
survey repairs. The corresponding provision in 1949 was £24,353,920.
The gross profit of £115,495,994 before making the above provision, compared with £63,020,405 last year, results from all or the widespread activities in which the company is interested. The large increase in gross profit compared with
1949 is mainly attributable to the following factors: —
Firstly, sales of crude oil and products have increased by approximately 26 per cent, whilst production costs have remained substantially unchanged.
Secondly, sale prices have increased by about 20 per cent for the following reasons:—
(A) The average for the year 1950 of United States Gulf prices, the basis of most price structures, showed an increase over the corresponding average prices for 1949.
(B) The devaluation of sterling affected prices for less than four months in 1949, but applied to the whole of 1950.
(C) The rise in freight rates in 1950 favorably influenced the return to the group on oils carried in our own tankers.
INTERESTS GRAVELY AFFECTED
Since my last statement to stockholders on June 20, 1950, there have been a number of events in Iran that have gravely injured the company’s interests in that country. The company hitherto has preserved silence in order not to embitter
any further its relations with the Imperial Iranian Government and thereby render the chances of effecting a satisfactory settlement of the questions at issue more remote. These developments have been fully reported in the press, but
stockholders will wish to be informed authoritatively of what has occurred.
The company’s status and rights in Iran have been seriously affected, first by the law promulgated in Iran on May 1, 1951 setting out the manner in which effect is to be given to the principle, approved during the previous March, of
the nationalisation of the oil industry throughout the country; and, secondly, by the steps subsequently taken by the Imperial Iranian Government purporting to implement this law.
In my last statement to you, a brief account was given of the supplemental agreement to the company’s 1933 Convention, which had been signed with the Iranian Government on July 17, 1949, and which was then awaiting ratification by the
Iranian Majlis. At the time, the terms were the most advantageous offered to any country then producing oil in the Middle East.
In January, 1951, it was reported in the press that the Arabian American Oil Company had made an agreement on December 31, 1950 with the Saudi Arabian Government for an equal sharing of the profits from its oil operations in Saudi
Arabia, after deduction of United States income tax. The Company thereupon informed the Iranian Prime Minister of its willingness to consider a new agreement on similar lines. During the negotiations for the 1949 supplemental agreement
the straight 50-50 profit-sharing scheme came up for discussion but after lengthy examination it was discarded in favor of increased payments under the existing methods of the 1933 Convention.
There was no question of the A.I.O.C being behindhand or less generous in Its revised payments than other companies operating in the Middle East. The record shows the reverse to be true.
At the same time as the company proposed discussions for an equal sharing of profits, it arranged to assist the Iranian Government in its financial difficulties by making an immediate advance against future concessional payments of
£5,000,000 and to advance a further £2,000,000 per month on the same basis for the rest of 1951.
OIL INDUSTRY NATIONALISED
Despite the company’s endeavors to persuade the Prime Minister to make known in Iran both the company’s offer to reopen negotiations for a 50-50 profit-sharing scheme, and its action in undertaking to make advances, General Razmara
refused to do so and maintained the closest secrecy regarding both matters. [Premier Ali Razmara] The result was that the Iranian public were not informed of them until some time after Dr. Mossadeq
had, on February 19, put a formal proposal to the Oil Committee for the
nationalisation of the Iranian oil industry.
The Bill, nationalising the oil industry, became law on May 1, by which time Dr. Mossadeq had become Prime Minister.
Besides breaking the solemn undertakings embodied in the 1933 Convention the Iranian Government went so far as to deny that this company even existed, referring consistently to it as “the former company.” A violent campaign of
unfounded vilification was directed against it, ancient grievances and charges being revived, and new ones invented.
On May 30, the Iranian Government, in a note to the Company, expressed a desire to use the company’s knowledge and experience in making its arrangements for the implementation of the nationalisation act.
Accordingly, a delegation consisting of four directors with members of the company’s staff, led by the deputy chairman, Mr. B. R. Jackson, reached Teheran on June 11 and 12. [Basil Jackson]
During the meetings that ensued with an Iranian Government delegation, the company, as an earnest of its desire to reach as soon as possible a workable agreement, offered to place £10,000,000 at the Government’s disposal immediately,
and thereafter £3,000,000 per month from July onwards, until agreement was reached. The company, while fully reserving its rights, also informed the Government that it was willing to come to an arrangement that would maintain the
efficiency of the industry and be consistent with the principle of nationalisation.
The Iranian Government delegates rejected these proposals out of hand after no more than half an hour’s consideration; in so doing they made it dear that they considered the discussions closed.
LORD PRIVY SEAL’S PROPOSALS WITHDRAWN
It was at this stage that the Iranian Government accepted President Truman’s suggestion that Mr. Averell Harriman should visit Teheran for discussions on the oil dispute. Mr. Harriman arrived on July 15, and after lengthy examination
with the Iranian Government of a formula, consistent with the recognition of the principle of nationalisation as approved in the single-article law of March 20, on which negotiations with His Majesty’s Government could take place, a
British Government mission, led by the Right Hon. Richard Stokes, the Lord Privy Seal, arrived in Teheran on August 4.
Owing to the persistent endeavors of the Iranian Government to confine the discussions to a narrower field, and, in particular, to a failure to reach agreement on arrangements for efficient management of the operations in Iran, the
Lord Privy Seal’s proposals were withdrawn and the talks were suspended.
UNFOUNDED ALLEGATIONS
I cannot conclude this account without making a clear statement on behalf of the company with regard to the accusations that have been made by the Iranian Government to the effect that the company has been guilty or falsification of
its accounts, that it has used political interference in order to further its interests in Iran, that it has encouraged administrative corruption in Iranian Government departments, and that it has undermined the independence of the
Iranian nation. It is a matter of regret to the company that the Iranian Government should by such a distortion of facts, present the company in a completely false light to the world. Not one shred of valid evidence has been or can be
produced by the Iranian Government in support of these accusations, and the company categorically denies that there is any truth in them whatsoever.
CURRENT DEVELOPMENTS
Because of the situation in Iran, described earlier in this statement, there have been important developments during the current year in the company’s widespread interests and operations outside that country.
An erroneous impression exists in some circles, owing perhaps to the company’s name, that its assets and activities outside Iran are not very substantial. As stockholders are aware, they included at the end of 1950 large crude oil
resources and refining capacity in various countries, the whole of our world-wide transportation, distribution and marketing organisations, research stations, and administrative services. Although this report would normally be devoted
to the company’s activities in 1950, I feel that stockholders will be interested in a brief account of the main developments which have occurred this year in our operations outside Iran, over and above their normal planned progress, in
consequence of the interruption of supplies of crude oil and products from Iran since July last.
We now have at our disposal crude oil production at the rate of about 20,000,000 tons per annum from our interests in Kuwait, Iraq, Qatar, and the United Kingdom, which is almost double what we obtained from these sources during 1950,
and, also, incidentally almost double our total production from all sources including Iran before the war. This tonnage is capable of further very substantial increase in the future. Oil supplies are principally derived from our 50
p.c. interest in the Kuwait Oil Co, whose production rate has been very rapidly expanded since June and is now approaching 40,000,000 tons per annum.
As regards refining capacity, intensive and successful efforts have been made to increase throughputs at our various establishments outside Iran. Throughput at Llandarcy, for instance, is now at the rate of 4,000,000 tons per annum,
and at Grangemouth 2,250,000 tons per annum. Our total refining throughput outside Iran is now at the rate of over 14,000,000 tons per annum (and we have processing agreements with other companies for a further 5,000,000 tons per annum),
comparing with 8,000,000 tons at the end of 1950. Additions now in hand, including the Kent refinery, should increase this total to over 20,000,000 tons by the end of 1952. Urgent consideration is being given to the building of further
new refineries.
Our shipping organisation, comprising the British tanker company’s fleet with a very large chartered tonnage totalling in all more than 300 ocean-going tankers, remains fully and actively employed on the company’s trade. Within one
month of tankers ceasing to call at Abadan and Mashur at the end of June, over 90 p.c. of the fleet were in trade again, a considerable achievement.
TRIBUTE TO CUSTOMERS AND OIL INDUSTRY COOPERATION
On the marketing side, despite the fullest use of our own resources of crude oil and refining capacity, there has inevitably remained a substantial gap between available supplies and our current market requirements. To close this gap we
have resorted to purchases from other sources, and arrangements for crude oil to be processed for us by other refiners. The understanding and helpful attitude of our customers, which we gratefully acknowledge, has been or much
assistance to us.
It is a remarkable tribute to the resourcefulness and flexibility of the world oil industry that the supply problems caused by the cessation of shipments from Iran has been so successfully faced. Industry committees, formed under
Government aegis, have been working on these problems both in America and in this country, and I wish to pay tribute to the great efforts which have been made by other oil companies on both sides of the Atlantic to meet the emergency.
The major part of the purchased oil required has been obtained from American sources, and this I would particularly wish to acknowledge.
PROSPECTS FOR CURRENT YEAR AND DIVIDEND
I do not usually venture to make any prophecy in my statement as to the company’s prospects, but in the present exceptional circumstances I feel that stockholders are entitled to any assurance that can be given them in respect at least
of the year now closing.
During the first six months of this year our sales had increased and prices were satisfactory, but during the latter half of the year our trading results have, or course, been seriously affected by the cessation of Iranian supplies
which completely cut off our income from that source.
Moreover, we have had to face exceptional outlays as the result of our policy or paying our Iranian employes, whether doing productive work or not, up to the date when British staff were compelled to leave. Other heavy outlays included
the expenditure involved in re-routing our tanker fleet and in having to purchase from other suppliers in order to meet our commitments to our customers.
However, after reviewing all the circumstances, I feel I can say that unless there is some wholly unforeseen happening in the remaining few weeks or this year, the company will be in a position to pay the same rate or dividend on the
Ordinary stock for 1951 as has been paid for some years past.
Related links:
“The Persians want the British off their back” (1951 Talk at Stanford)
The British Will Find Some Way To Control Iranian Oil | John S. Knight (March 1951)
Anglo-Iranian Oil Company | Annual Meeting: Dec. 20, 1951
MOSSADEGH t-shirts — “If I sit silently, I have sinned”
