The concession and oil in Iran: the evolution of a concept

The ‘Anglo-Persian’ concession agreement secured by William Knox D’Arcy in 1901 covering mineral exploration rights in Persia (now the Islamic Republic of Iran) is a remarkable story of grit and farsighted commercial and legal acumen. The concession, which was granted for a 60-year term, became the vehicle for the formation of what today is bp plc. The commercial principles and the legal tenets that underpin this historic concession are reviewed and parallels drawn with modern-day exploration agreements. The remarkable brevity and clarity of the original legal drafting, and the clever apportionment of commercial risk throughout the original bargain, have influenced the evolution of exploration agreements throughout the oil and gas sector. Despite the evolution of commercial and legal constructs, the agreement structure devised by D’Arcy over 100 years ago in the Anglo-Persian concession is still recognisable today. As Iran prepares for potential foreign investment in a post-sanctions world, the original c...