Drops of Oil

The centenary of the 1923 Treaty of Lausanne has already come and gone. Thankfully, so has most of the folklore claiming that the treaty would “expire” in 2023 and suddenly unlock Turkey’s supposedly gagged oil and mineral wealth. Lausanne contained no secret clauses banning petroleum extraction. That was a loud and charming story, but always the wrong one.

There is, however, also a quieter story on Turkey’s experience with oil, which has long been buried in company files and diplomatic correspondence, and which is far more revealing. It is about a Turkish intermediary attempting to persuade Europe’s majors that Anatolia might be worth the gamble for the oil game.

The Realities of Terrain

In 1926, Royal Dutch Shell’s leadership was curious. Reviewing Turkey’s petroleum prospects, their representatives conceded that “in Asian Turkey … in the Erzeroum district and around Lake Van deposits are known to be quite important,” and that “further opportunities to find productive strata exist to the N.W. of Mosul on Turkish ground territory.” Any optimism, however, quickly met the realities of terrain and distance. “All these sites are not topographically favourable,” they warned, “generally far from the coast and in mountainous areas.” In short, they were not “very much in favour of risking large sums of money in Turkey.”[1]

This gap between curiosity and caution was filled by Satvet Lütfi Bey. A memorandum from November 1926 described him as “a man of standing and well reputed in his country,” dispatched to Europe “for dealing in some important concession matters.” Lütfi was once a loyal follower of the liberal Young Turk Prince Sabahaddin, now darkening the doors of politicians and the big capital like Shell as an entrepreneur. He claimed to hold options over oil prospecting rights already granted by Ankara and suggested that Shell might take over “some or all of these prospecting licences”. The list consisted of potential oil reserves in Adalia, Erzurum, Van, Ganos, and even Mosul.[2]

At the time, “La Société Turquie pour l’industrie et le Commerce de Naphte” appeared to enjoy a “privileged position in Turkey,” with a “priority right in respect to all the oilfields in Turkey.” Even though another company had a semi-official advantage, Lütfi’s strength laid in his alleged ability to “access” and influence the Ankara government.[2]

A Useful Asset

Writing to Koninklijke Nederlandsche Maatschappij (a Dutch oil company based in The Hague and part of the Royal Dutch Shell group), Lütfi set out the oil fields “among which those I have directly optioned,” including sites worked by the Russians during the wartime occupation, where “the fire continued for several months.” Others near Erzurum were being exploited “entirely with primitive means,” though the labourers had earlier experience in Baku. Lütfi highlighted his local knowledge with confidence: “I personally know the lands very well.”[3]

Then came his pitch. “If you are willing to work with us,” he wrote, “I am ready to set aside all my other interests… I will reside in Ankara to influence the decisions of the government.” He pointed to “very good relations with several deputies, ministers and the Director General of Mines,” and offered engineers trained in British and Russian oil fields.

‘A Great Enemy of the Turks’

After internal deliberations, Shell invited Lütfi to come for a meeting.[4] The Turkish ambassador to Berlin (there was none in The Hague at the time) welcomed the prospect of Dutch capital finding “an active and happy field in Turkey,” assured Shell of “all facilities as well as his best support,” and described Lütfi as “not only worthy of your trust… [but] a useful asset.”[5]

Yet the new republic’s openness to the plan came with sharp anxieties, above all, the shadow of Calouste Gulbenkian, the Ottoman Armenian oil financier long associated with Shell. Reporting on meetings with the Minister of Commerce in January 1927, Lütfi admitted that the minister “was not very inclined” and asked “with a certain suspicion” whether Royal Dutch was identical with Gulbenkian, who had recently sought major oil concessions. Lütfi repeated the reasoning plainly: “As you know, Ghulbenkian is Armenian and a great enemy of the Turks.”[6]

Shell officials insisted it was “impossible” that Gulbenkian operated independently of Sir Henri Deterding, because, in oil-world lore, Deterding was “the Napoleon of oil” and Gulbenkian his “Talleyrand.” Lütfi summed up the situation plainly: “The situation was very difficult for me.”[6]

Mr Six Per Cent?

Still, negotiations edged forward. After further talks, Lütfi reported that “the few amendments that you are requesting in the Law will be accepted,” provided Shell sent a representative to settle the details.⁶ He outlined practical adjustments: the 25,000-lira guarantee for research permits might be waived if equipment arrived at once; drilling obligations could be pooled across permits; and once exploitable oil was struck, further drilling might no longer be required.[6]

Shell formalised the arrangement. Lütfi was commissioned to Ankara with an allowance of £120 per month for six months and the promise of a six per cent stake should a working company materialise. Two “main objections” remained: “the Turkish Mining Law… contains regulations prohibitive to a rational and economical manner of exploitation,” and “for the most important fields hitherto discovered licences have already been granted.”[7]

By autumn 1927, momentum had ebbed. Writing from Ankara, Lütfi explained that debate over the new petroleum law, and the changes demanded by Shell, had been postponed until parliament reconvened. He asked Deterding simply to confirm continued interest.[8] The reply was not what he had expected. Turkey, Deterding concluded, held “no attraction for us as long as the present laws are in existence,” and there was “no reason to continue the salary to Satvet Lütfi.”[9]

‘Not a Single Drop of Our Oil’

The episode thus came to an end as abruptly as it had begun. Over time, it had become a common belief for the nationalist Turkish government that foreign assistance might be welcomed, but ownership would not be relinquished. As a minister later assured parliament, “not a single drop of our oil” would be given to foreigners unless the government “completely failed to obtain results themselves.”[10] Of course, this was not the end of Turkey’s oil story. By 1930, Turkish engineers such as the United States-trained Cevat Eyüb began to survey Anatolia themselves, arguing that the Baku basin extended into Turkey and identifying sites where modest production had once occurred.[11]

This is how Lausanne myths evaporate under archival weight. Turkey’s experience with oil was not one of hidden abundance in Anatolia, denied by the 1923 treaty. It was about caution, law, and geography, and of entrepreneurs like Satvet Lütfi Bey, willing to sell what could not be bought.

NOTES

[1] Dr. D. Th. Erb to Deterding, 23 Sept. 1926, Shell Archives, The Hague, GHC/TUR/1/1.

[2] “Memorandum, Oil Concessions in Turkey,” 13 Nov. 1926, Shell Archives, The Hague, GHC/TUR/1/1.

[3] Satvet Loutfy to KNM, 6 Nov. 1926, Shell Archives, The Hague, GHC/TUR/1/1.

[4] P [?] to D, 13 Nov. 1926, Shell Archives, The Hague, GHC/TUR/1/1.

[5] Turkish Ambassador (Berlin) to D, 23 Nov. 1926, Shell Archives, The Hague, GHC/TUR/1/1.

[6] Satvet Lutfi to Bataafsche Petroleum Maatschappij, 7 Jan. 1927, Shell Archives, The Hague, Shell Archives, The Hague, GHC/TUR/1/1.

[7] De Kok to D, 18 Jan. 1927, Shell Archives, The Hague, GHC/TUR/1/1.

[8] Satvet Lutfi (Ankara) to Deterding, 22 Sept. 1927, Shell Archives, The Hague, GHC/TUR/1/1.

[9] Deterding to De Kok, 29 Sept. 1927, Shell Archives, The Hague, GHC/TUR/1/1.

[10] M. Soumbatoff, Memo for Kessler, 3 Mar. 1947, Shell Archives, The Hague, GHC/TUR/1/2.

[11] Daily Oil Bulletin, 15 May 1930.

Blogposts are published by TLP for the purpose of encouraging informed debate on the legacies of the events surrounding the Lausanne Conference. The views expressed by participants do not necessarily represent the views or opinions of TLP, its partners, convenors or members.