A Brief History of BP

  • Share
  • Read Later
Courtesy Edwin Black / Banking on Baghdad / BP Archive / BP PLC

Distribution of Anglo-Persian kerosene, circa 1905-1910.

BP, the giant multinational now responsible for untold millions of gallons of oil billowing into the Gulf of Mexico, has taken pains in recent years to spruce up its image. Its logo, a flowery pastel helix, beams earthy friendliness while the company's current tagline — "Beyond Petroleum" — expresses its desire to diversify into sustainable, greener energy. But the scale of the spill — and the seeming inability of the government to staunch the flow without BP's aid — has provided a stark reminder of the power that Big Oil still holds over national politics and the fate of entire communities that live in its shadow.

BP has long wielded such influence — in fact, the story of its origins is moored in empire and controversy. In 1901, an Australian-British mining magnate named William Knox D'Arcy won a concession from Persia (now Iran) to explore for oil in the country's rugged, arid southwest. Seven years later, after almost giving up, D'Arcy's surveyors struck it rich atop a sulfurous patch near where the armies of Alexander the Great had supposedly once seen the lights of black liquid fires burning upon the earth. The Anglo-Persian Oil Company emerged from this discovery and stood in command of what was the greatest oil find of its time. The British government became the company's major stakeholder on the eve of World War I thanks to the vociferous prodding of Winston Churchill — then the chief of the British navy — who saw in Persia's wells a bottomless source of fuel for Britain's modernizing fleet. By the Great War's end, says BP's own website, "war without oil would be unimaginable."

The company made handsome profits through the 1920s and 30s as much of Western society moved toward a world sped along in petroleum-burning automobiles and illuminated by petroleum-burning power plants. The company — renamed the Anglo-Iranian Oil Company (AIOC) in 1935 when new leadership in Tehran opted to shift the nation's name away from the archaic "Persia" — operated what was then the world's largest refinery near the city of Abadan. Over 200,000 workers toiled in scorching heat and often desperate conditions. Observers recounted the inequities between the Iranian workers housed in a rickety slum known as Kaghazabad, or "Paper City," and the British officials who oversaw them from air-conditioned offices and lawn-fringed villas. Water fountains were marked "Not for Iranians."

During World War II, the refinery continued to feed the Allied war machine despite food shortages and a cholera epidemic among workers. Manucher Farmanfarmaian, then director of Iran's Petroleum Institute, wrote grimly in 1949 of the misery of life there: "In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep and canoes ran alongside the roadways for transport. When the rains subsided, clouds of nipping, small-winged flies rose from the stagnant waters to fill the nostrils, collecting in black mounds along the rims of cooking pots and jamming the fans at the refinery with an unctuous glue."

Needless to say, many Iranians were not happy with AIOC's presence. In 1951, the country's democratically elected premier, Mohammed Mossadegh, decided to nationalize its holdings. The takeover plunged the world into crisis — an essential pipeline was shut off as the U.K. and the U.S. boycotted Iran and blocked other European technicians from replacing the British ones who had been fired. TIME made Mossadegh Man of the Year in 1951, depicting him, somewhat uncharitably, as a "strange old wizard" leading a hapless, faraway nation into the clutches of Communists. Ultimately, U.S. fears of Soviet influence — and the British desire to regain their oil — led to a joint CIA and British intelligence operation known as "Operation Ajax." It toppled Mossadegh in a carefully orchestrated 1953 coup and eventually handed the country back to the pro-Western Shah, who assumed autocratic powers.

In 1954, in an attempt perhaps to move beyond its image as a quasi-colonial enterprise, the company rebranded itself the British Petroleum Company. But the template was already set in the Middle East: future generations of Iranians would remember a meddling West, self-serving and thirsty for oil. BP's controversial legacy played no small part in the political rhetoric of the 1979 Iranian Revolution, which ousted the Shah and paved the way for the Islamic Republic. BP's oil interests elsewhere in the Middle East were also curtailed by the nationalization schemes of Arab states — in 1975, it transported 140 million tons of oil from the region, but only 500,000 in 1983.

Recognizing the need to cast its net wider, the company built up a network of new holdings, including off-shore rigs in the North Sea, near the U.K., and Papua, eastern Indonesia. As the British government sold off its own stake in the company, BP started acquiring a sizable presence in the American market through the 1980s and 90s, buying up companies like Standard Oil of Ohio, ARCO and Amoco. In 1977, BP had already started pumping oil from fields by Prudhoe Bay in northern Alaska down a 1,200 km-long pipeline that ran all the way to refineries in the south of the state. The endeavor involved one of the largest infrastructure projects ever attempted in North America and BP prided itself on the environmental sensitivity of its planning, which included raised platforms in certain stretches so as to not impede the natural migrations of caribou.

Still, its recent record in North America will likely be remembered more for its mishaps. In 2005, an explosion in a BP refinery in Texas killed 15 workers. In 2006, over 250,000 gallons of oil spilled through corroded sections of the BP pipeline in Alaska across the North Slope, leading to a partial shutdown of the company's Prudhoe Bay field and a costly cleanup. In both instances, it was alleged that cost-cutting measures instituted by BP executives had led to poor maintenance. And now the 2010 spill bodes to be the worst in history. BP claims to look "beyond" petroleum, but the company — and a world still dependent on its industry — remains very much in the muck.