Daniel Yergin: The Prize Chapter 7 Synopsis
In 1990, Daniel Yergin composed the epic work, “The Prize.” The most concise summary of this masterpiece would be to call it “The Oil Bible.” Indeed, with 784 pages of text and almost 100 more of source material, “The Prize” is easily as thick as a Bible. But with such a long, twisting tale of international, personal, and geopolitical will grappling for the control of a single commodity, Yergin has done an excellent job of summarizing the tale. The following is a brief synopsis of Chapter 7: Beer and Skittles in Persia.
Essentially, Iran (formerly known as Persia) was looking to find someone who wanted to speculate for oil and grant that individual a concession, for a price. The emissary sent to Paris to find someone willing to engage in the deal was Antoine Kitabgi. “What was to flow from General Kitabgi’s efforts would prove to be a business transaction of historic proportions. Though its fate would hang by a thread for years, the deal would initiate the era of oil in the Middle East, eventually propelling that region to the center of international political and economic contention. And Persia itself—or Iran, as it would be known from 1935 onward—would emerge into a prominence on the world stage it had not enjoyed since the days of the ancient Persian and Parthian empires.” (Yergin, 134)
The investor that Kitabgi found was William Knox D’Arcy, an incessant gambler who struck it rich on a gold mine in Australia. After some negotiation and some political maneuvering between Britain and Russia, D’Arcy signed a concession with Shah Muffazar for 20,000 pounds cash, 20,000 in shares, and 16 percent of annual net profits (Yergin, 137). D’Arcy got a concession of 75 percent of the country for sixty years for that price.
D’Arcy spent years “wildcatting” (experimental drilling in search of oil) around Iran for years, but began to run his budget dry and pleaded for a loan from the British government. He found one or two wells that produced small amounts of oil, but nothing that amounted to huge success. But for geopolitical reasons (British concerns wanting to ensure that the valuable concession still stayed in British hands), D’Arcy received sympathetic attention from the government. Despite an arrangement with Scottish Burmah Oil, it took seven years before oil was struck.
Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, 1991.