1928 Achnacarry As Is Agreement

see also the Arab-American oil company (aramco); Iran; Iraq; Organization of the Petroleum Exporting Countries (OPEC); Persian Gulf (Arabic); red line agreement; Royal Dutch shell. The Baku-Tbilisi-Ceyhan gas pipeline was built to transport crude oil and the Baku-Tbilisi-Erzurum gas pipeline was built to carry natural gas from the western side (Azerbaijani sector) of the Caspian Sea to the Mediterranean, bypassing Russian gas pipelines and thus Russian control. After the construction of the pipelines, the United States and the European Union proposed to extend them to the east (Kazakhstan and Turkmenistan) of the Caspian Sea through the Trans-Caspian Oil Pipeline Project and the Transcapian Pipeline under the Caspian Sea. In 2007, Russia signed agreements with Turkmenistan and Kazakhstan to connect their oil and gas fields to the Russian gas pipeline system and effectively kill the underwater route. The impact of the agreement on the position of oil producers in the Middle East has been profound. It has been instrumental in the reluctance of dealers to increase production in this low-cost region. In 1928, when it was introduced, more than a third of the world`s production capacity was closed due to oversupply. The owners feared that the development of inexpensive capabilities in the Persian Gulf would only increase their losses. The As Is and Red Line agreements delayed the exploitation of oil resources in the Middle East until after World War II; At the same time, they led to the depletion of reserves in areas later considered “safe” politically, such as the United States and Canada. The resulting distribution of production shares between Middle Eastern countries and other countries has exacerbated anti-colonial and anti-Western sentiments among the population of many Middle Eastern countries, especially Iraq and Iran. It also established a model for safeguarding oil profits through market control, which members of the Organization of the Petroleum Exporting Countries later attempted to emulate. The agreement was reached on 18 August 1928 at a meeting of representatives of the oil companies at Achnacarry Castle. On July 31, 1928, following the discovery of a vast oil field in Iraq and the TPC negotiations on the distribution of crude oil production among the partners, representatives of anglo-Persian, Royal Dutch/Shell, Compagnie Française des Pétroles (CFP, then Total) and near East Development Corporation signed the Red Line Agreement in Ostend, Belgium.

Under the terms of the agreement, each of the four parties received a 23.75 percent share of the total crude oil produced by TPC, which could be mined anywhere in the Middle East between the Suez Canal and Iran, with the exception of Kuwait. The remaining 5% went to Calouste Gulbenkian, an Armenian businessman who was part of the TPC. However, the most important feature of the red line agreement was its “self-denial clause”. It stipulated that the participating companies agreed not to exploit oil deposits within the TPC zone unless they secured the support of other members. The Achnacarry Agreement or “As-Is Agreement” was an early attempt to limit oil production, signed in Scotland on September 17, 1928. [4] The discovery of East Texas Oil Field in the 1930s led to a production boom that drove prices down, leading to the Texas Railway Commission controlling production. The Commission de facto retained control of the market until the rise of OPEC in the 1970s. And any efforts to stabilise market share and support prices risk being undermined by new deliveries that are not covered by the agreement. In the 1920s, there was competition between oil companies. This was felt in India between Standard Oil of New York and a branch of the Royal Dutch Shell.

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