The country known today as Iraq is historically renowned as Mesopotamia, a Greek word meaning "the land between two rivers" of the Euphrates and the Tigris. (In Arabic: it is calledBayn al-Nahreyn). These rivers rise in the highlands of Anatolia to the north and merge before flowing into the Persian Gulf.
The ancient Mesopotamian civilizations - the Sumerian, the Akkadian, the Assyrian, the Babylonian, and the Chaldean (Neo-Babylonian) - built great cities and governments, developed agriculture, writing, mathematics and astronomy, and also used oil and bitumen for various purposes. The oil and bitumen came from numerous seepages found in Iraq.
There are many references in the Bible (the Old Testament) to the kings, cities and events of Mesopotamia. In the 6thcentury B.C., the Persian Emperor Cyrus conquered Babylon and the region thus came under Persian rule for the following several centuries. Then came Islam in the 7th century and a century later began the subsequent rule of Abbasid caliphs centered in "Baghdad" - an old Persian name meaning "God's gift" for a city which was founded near the ruins of Ctesiphon, the capital of Persian kings in centuries before. In the 13th century, the Mongols destroyed the Abbasid Caliphate. A century later, Tamerlane captured Baghdad. From the 17thuntil World War I, Iraq was part of the Ottoman Empire. This long (and often complicated and turbulent) history, which is so characteristic of the ancient Eastern civilizations, has resulted in multi-ethnicity in Iraq and elsewhere in the Middle East.
The geology of Iraq is closely related to the Zagros orogenic belt in southwest Iran. These Cenozoic mountains formed as two continental plates, Arabia and Asia, collided and the Tethys Sea that once lay between them completely closed. The highly deformed and overthrust section of Zagros is present only in the northeastern Kurdistan region of Iraq (see "Targeting Giants in Kurdistan" in GEO ExPro, January 2006). The Mesopotamian plains are part of a long, vast foreland basin developed in front of the rising Zagros in post-collisional Oligocene-Neogene times.
Iraq's oil seeps did not escape the attention of the 19th century explorers and geologists who mapped the structure and stratigraphy of the Zagros mountains and foothills. For instance, in his 1879 paper, the Austrian geologist Emil Tietze noted: "Near Kerkuk, Tuz Kurmatti and Kifri, one of the most important areas of the Old World is waiting for future exploration; once those areas, at present still much too remote, will be made more accessible to European skill."
Naft Khaneh: The House of Oil
What drew more attention to Mesopotamia's oil was the discovery of the Masjid Sulaiman field in Iran in 1908 by the Anglo-Persian Oil Company (APOC) - thanks to the efforts of an able petroleum engineer and geologist, George Bernard Reynolds (see "Persia 1908: The First Centenary of the First Oil Well in the Middle East" in GEO ExPro, November 2008).
In fact, the first oil wells in Iraq were not drilled in Iraq proper but in a Persian territory that was later transferred to the Ottoman Empire under a territorial exchange agreement in 1913. In Chiah Surkh within the "transferred territory," Reynolds drilled his first wells in 1902-1903. The wells encountered oil and gas shows, but were abandoned for more productive prospects further south. However, APOC revisited the area and drilled in an oil-seepage called Naft Khaneh ("House of Oil" in Persian) in 1909 and it hill oil (41.5 API) in Miocene limestone (Jeribe Formation) capped by Miocene evaporites. The field was developed in 1925 by the Khanaqin Oil Company, an APOC subsidiary. This company also built a pipeline to and a refinery in the nearby town of Khanaqin in 1927, the first oil refinery and pipeline in Iraq.
The Turkish Petroleum Company and "Mr. Five Percent"
Meanwhile, an Armenian engineer, a shrewd businessman and a citizen of the Ottoman Empire, Calouste Sarkis Gulbenkian, had his eye on the oil prospects of Mesopotamia. The son of an oil trader, Gulbenkian learned the art of negotiation in the bazaars of Istanbul and petroleum engineering at King' College, London. After graduation in 1887, the eighteen-year old Gulbenkian went to help his father's oil industry in Baku. In 1891, the Ottoman government asked him to investigate oil possibilities in Mesopotamia and he prepared a comprehensive report. Thus began Gulbenkian's devotion to Mesopotamian oil for the next decades of his life.
In the early 20th century, German, French, British and American businessmen and diplomats were all interested in the oil resources and lucrative commercial prospects of Mesopotamia and were engaged in negotiations with the Ottoman Sultan Abdul Hamid. The Germany of Kaiser Wilhelm was involved in the shape of the Deutsche Bank, which ran the Anatolian Railway Company. In 1905, they dispatched a survey team to northern Iraq led by geologists A. Kissling and Cesare Porro who wrote a promising geological report of the region. The American interests were represented in the person of Rear-Admiral Colby Chester, who worked for the New York Chamber of Commerce and arrived in 1908 in Constantinople (Istanbul) to propose the construction of a new port and a few railways. Although Chester succeeded in theory to obtain the Ottoman government's consent for his projects and even for mineral exploration, these ventures were never materialized or even officially ratified. Shortly later, the Sultan lost his throne and Topkapi Palace in the coup d'état of the Young Turks. The British initially approached the Ottoman officials through APOC led by William Knox D'Arcy, a businessman in London, and strongly supported by British politicians in the region. Alarmed by the new political changes, in 1910, the British pushed for establishment of the Turkish National Bank, which was actually a British-owned entity. Another important player was the Royal Dutch-Shell (known as the Anglo-Saxon Oil Company) which was purely in oil business.
In 1912, Sir Ernst Casel, a German-born English banker and with considerable influence in Istanbul, registered the Turkish Petroleum Company (TPC) in London. This enterprise also included the Deutsche Bank and the Royal Dutch-Shell, but not APOC. Moreover, it did not have any oil concession at hand. Gulbenkian, who had become a British citizen in 1902 and was involved in British ventures in Turkey all along, helped to strengthen TPC and gain an oil concession from the Turkish government. In 1914, at the request of the British and German ambassadors, Turkey's Grand Vizir, Said Halim, gave permission to TPC for the exploration of oil in the provinces of Mosul and Baghdad, although legal rights and contractual conditions were not outlined. In 1914 a new TPC emerged with a capital of £160,000 and including 50% British (Turkish National Bank and D'Arcy Group, an APOC subsidiary), 25% Deutsche Bank, and 25% Royal Dutch-Shell. It was agreed that 2.5% of Dutch-Shell's and 2.5% of D'Arcy Group's shares belonged to Gulbenkian who treasured this 5% share in Mesopotamian oil all his life, and thus gained the fame of "Mr. Five Percent." (J. Norwich and B. Henson recount his life in a 1987 book, Mr. Five Percent.)
The Iraq Petroleum Company and the Kirkuk Field
TPC was, however, only a company on paper. On 28 July 1914, the very day the Grand Vizir wrote his permission letter to TPC, Austrian prince Franz Ferdinand was assassinated in Sarajevo, triggering World War I that engulfed Europe for the following four years. As the war ended, Germany and Turkey were defeated, and the Ottoman Empire was split into several states of the modern Middle East. Mesopotamia became a separate country under the British mandate called Iraq, an old Persian name (Irak) for this region. Looking for a new ruler for Iraq, the British chose Faisal, a Sunni Arab who had fought against the Ottoman Turks with the help of T. E. Lawrence and had been put in power in Damascus in 1920 by the British but ousted by the French shortly after. In 1921, Sultan Faisal became the first Hashemite monarch of Iraq and was to rule the country until 1933. (He was succeeded by his son Sultan Ghazi and grandson Faisal II until the 1958 coup d'état changed Iraq to a republic government.)
While post-war rivalries among Britain, France and the USA were dragging on, two geological expeditions in Mesopotamia took place. The first was led by Edwin Pascoe of the Geological Survey of India during 1918-19, and the second by Shell geologists Arthur Nobel and Ralph Evans during 1919-1920. In 1920, the British and the French came to a simple agreement: The German shares of TPC would be overtaken by the French. This angered the Americans who had, in those years, a serious fear of shortage in their domestic oil resources and production. American companies were, therefore, looking for overseas resources, and the government was urging Britain to adopt an Open Door Policy for economic enterprises in its Middle Eastern colonies. Walter Teagle, president of New Jersey Standard Oil Company, was on constant contact with TPC officials. Eventually, the British concluded that oil ventures in Mesopotamia would actually be easier with American capital, technology and political support.
On 24 March 1925, TPC gained a new formal concession from the Iraqi government, and shortly later organized a large geological expedition including several American, British and French geologists and led by Prof. Hugh de Boeckh, a geological advisor to APOC. Ranking of drilling prospects became a matter of dispute among the geologists. Although De Boeckh's official report in 1926 did not recommend the Kirkuk seepage site for drilling, participating field geologists A.H. Noble (for Shell) and E.W. Shaw and A.C. Trowbridge (for the American group) put in writing Palkhana and Kirkuk as their best recommended sites for drilling in the folded zone of northeast Iraq. TPC decided to drill two wells at Palkhana (which started on 5 April, 1927) and four wells at other sites including one at Kirkuk. Of all these, only Baba Gurgur No.1 at Kirkuk became Iraq's first oil gusher. Baba Gurgur ("Father of Flames" in Kurdish) is an oil seep close to the town of Kirkuk (now the administrative center of Iraqi Kurdistan.) The name Kirkuk (or Kurkura) is apparently a variation of "Gurgur." The ancient Assyrian name for Kirkuk was Arraphka (simply "City") and the Kurdish-Persian name is Garmian or Garmakan ("Hot Land").
A geological cross-section of the Kirkuk anticline was prepared by A.C. Trowbridge, a professor of geology at the University of Iowa. Location for drilling was selected by John M. Muir, the first Chief Geologist for TPC who had considerable experience in Mexican fields. Baba Gurgur No. 1 was spudded in on 30 June, 1927 and on the early morning of 14 October 1927 the well came in with a bang. The gusher was so forceful that it took nine days to tighten the "Christmas Tree" on the well. By then, it had flowed at 95,000 barrels a day. The producing reservoir was Oligocene limestone (Kirkuk) capped by Miocene salt - a geologic setup similar to the Masjid Sulaiman and Naft Khaneh oil fields. Oil density was 36 API and sulfur content was 2%.
In face of the new realties, TPC had to make new arrangements. On 31 July 1928, TPC, although still controlled by the British, came to the following composition: APOC (23.75%), Royal Dutch/Shell (23.75%), Compagnie Francaise des Petroles (23.75%), Near East Development Corporation (a joint venture of American companies - Jersey Standard, Socony, Gulf Oil, Pan-American, and Arco) (23.75%), and Mr. Gulbenkian (5%, of course). Moreover, in the same company meeting, Gulbenkian took a red pen and drew the boundaries of the former Ottoman Empire (from Turkey as far south as Yemen) and asked the consortium members not to engage in independent exploration or production within that territory. Although the TPC members agreed to the so-called Red Line Agreement, it proved to be cause of bitter conflicts in later years and faded away as American companies withdrew from it.
The Kirkuk field discovery was indeed vital for TPC. By the end of 1930, twenty producing wells were drilled at Kirkuk while numerous wells drilled in the other parts of Iraq did not produce oil (until 1937 when the Ain Zaleh field was discovered). Two wells drilled in 1927 at Palkhana to depths of about 2000 feet were suspended because of mechanical difficulties; and two more wells drilled in the following two years met only with water and high-pressure gas. Four wells drilled in the Injana structure, which was on top of De Boeckh's list, did not yield oil, either.
In the Aftermath of Kirkuk
The 1927 Kirkuk discovery was a historic event for Iraq and a milestone for Middle Eastern oil industry. In 1929, TPC officially changed its name to Iraq Petroleum Company (IPC), and the following year, Iraq obtained its independence from Britain. In 1931, the Iraqi government signed a new agreement with IPC, requiring the company to pay royalties of four shillings (gold) per metric ton of oil produced, with a minimum annual payment of £400,000 for the first twenty years. Oil production and export from the Kirkuk field began in 1934 as IPC completed pipelines that carried oil to refineries in Tripoli (Lebanon) and Haifa (then Palestine). (The Haifa branch was later closed down because of the Arab-Israel conflicts.) The Kirkuk field is still Iraq's largest oil field, estimated to hold over 12 billion barrels of oil, and recently producing close to 600,000 b/d. About 500 wells have been drilled in the field so far.
The 1932 agreement defined IPC activities to the east of the Tigris, and granted the northwestern part of Iraq to a new consortium, the Mosul Petroleum Co. In 1938 the Basrah Petroleum Co. became active in southern Iraq. These three sister companies, which built the nucleus of Iraq's petroleum industry and enjoyed a free hand in it, were finally nationalized in 1973. The rest is (the recent) history.