From gold mining in Australia to oil production in Iran

This spring, a rumor that has been recurring for years has resurfaced in the business world: a possible merger between the two European oil giants, or, in other words, between British Petroleum (known commercially as BP) and Shell (the new name for Royal Dutch Shell). Whether the merger actually materializes or not, the reality is that the history of both oil companies is more than a century old and filled with corporate moves. If we want to trace the origins of British Petroleum, we must go back to 1901, when a wealthy investor from southern England obtained a concession for some land in Persia (now Iran) for oil exploration. His name was William Knox D'Arcy, and the project would have great historical significance.

Oil was not the first business in which D'Arcy invested, because from a very young age he followed the family tradition and joined the activities of his father, a wealthy lawyer who had emigrated to Australia when our protagonist was still a teenager. The lineage was part of the elite of the islands since the 14th century, because they were descendants of Lord Darcy Knath, a chief governor of Ireland (in this case, with the name written with the same spelling as one of the protagonists ofPride and Prejudice; the apostrophe came later).

In 1882, once independent from his father, his initial project was to exploit a gold mine in Queensland (Australia) with local partners, through the formation of a company called Mount Morgan Gold Mining. The gamble made them millionaires. At that time, his life was centered on mining, and he was never much interested in socializing. His only distractions were sports, especially horse racing, shooting, and rowing. In fact, he became president of his rowing club and at the same time served as a board member of the local equestrian club. At the age of fifty, and with a considerable fortune, he returned to his homeland, England, where he dedicated himself to a life of extreme luxury and socializing with the elite. But that life of continued extravagance came at a very high cost, combined with the bankruptcy of the Queensland National Bank—which diminished his assets—and the fall of Mount Morgan Gold Mining's shares. We had to go back to looking for projects to multiply the loaves and fishes.

The next step, in 1900, was to invest part of his resources in the search for minerals and oil in Persia, especially after securing the concession mentioned at the beginning. It all began with an agreement with the Shah, who granted him the land for sixty years in exchange for 20,000 pounds sterling plus a percentage of future profits if the exploration was successful. The project was carried out under the umbrella of a consortium of investors, later joined by a company called Burmah Oil Company, of Scottish origin. After seven years of attempts, success was lacking and D'Arcy was on the verge of ruin, so the money contributed by Burmah saved him from bankruptcy. Black gold eventually sprang from Persian soil, and this led to the creation of a new company, the Anglo-Persian Oil Company (1909), which he initially led himself. It was also the first minute of the region's transformation into a territory of geopolitical interest and a breeding ground for perpetual conflict.

Retired from the frenetic activity of business, D'Arcy died of pneumonia at his impressive mansion, Stanmore Hall, in Middlesex, on May 1, 1917. He apparently left an estate of nearly one million pounds, a fortune at the time. His life ended, but the Anglo-Persian Oil Company would continue its journey over the decades: in 1935, it changed its name to the Anglo-Iranian Oil Company, and in 1951, it was nationalized by the Iranian state. Just two years later, the shareholders would regain their business. Finally, in 1954, they changed their name to British Petroleum, the last predecessor before the current name, BP.

Incidentally, the Burmah Oil Company, which played such a prominent role in 1905 in preventing D'Arcy's ruin, ended up in the hands of Castrol in 1966, and Castrol itself was acquired by British Petroleum in 2000. The circle was complete. Of course, those 20,000 pounds sterling that D'Arcy invested to secure the concession from the Shah have now grown into a company valued at 56 billion.