Roland Head summarises developments at BP and Royal Dutch Shell.
Over the last 60 years, technological developments and political crises have repeatedly driven the oil and gas industry to new locations and more extreme drilling techniques.
Yet some things haven't changed. As the Queen celebrates 60 years on the throne, problems in Iran are affecting global oil supplies, just as they were in 1952. Take a look at these headlines:
"Britain, US Offer Iran New Deal"
"Global Powers and Iran Meet in Baghdad"
One of them is from the New York Times on 23 May 2012, and one is from the Calgary Herald in 1952, during the middle of a crisis that caused the Anglo-Iranian oil company to become The British Petroleum Company -- better known today as BP (LSE: BP).
A familiar story
Anglo-Iranian had been founded by William D'Arcy in 1908, after he funded (and was nearly bankrupted by) a seven-year search for oil in Iran. Following his eventual resounding success, he formed a partnership with the then Shah of Persia to work the Iranian oil fields for their mutual enrichment.
This partnership was very successful, until post-war political change in Iran made its apparent subversion to imperialist Westerners unpalatable to the new regime.
History repeats itself
In 1951, the Iranian government nationalised its oil fields, in a high-handed move that shareholders in Repsol will be familiar with, having recently had its share of Argentinean oil business YPF repossessed in exactly the same way.
The resulting global boycott of Iranian oil nearly drove the country's economy into the ground, leading to a repentant Iran cobbling together a new deal in which Anglo-Iranian had a 40% stake in a consortium of foreign oil companies that returned to Iran to run its oil fields.
Whether that will happen this time -- in Argentina or Iran -- is another question.
More déjà vu
The story of the UK's other oil major, Royal Dutch Shell (LSE: RDSB), is no less fascinating and contains another familiar theme for today's investors.
Shell founder Marcus Samuel began by importing exotic sea shells from abroad in the mid-19th century. His sons expanded the business and in 1892, began importing oil, much of which came from Russia.
Then, as now, being too dependent on Russian resources was considered risky, persuading Shell to start looking elsewhere for additional oil supplies. In 1903 it formed a partnership with Royal Dutch Petroleum, and the rest, as they say, is history. Today, Royal Dutch Shell is the largest company in the FTSE 100, with a market cap of £130 billion. It represents 9% of the blue-chip index, with BP representing more than 5%.
And they're off!
By 1953, as Queen Elizabeth II was being crowned in Westminster Abbey, the UK oil industry was really starting to spread its wings. Over the next decade, substantial oil finds occurred in Nigeria, Libya, the Gulf of Mexico and the Middle East.
Offshore drilling became far more advanced and was soon moving into deeper water, which turned out to be a fortuitous development. In 1969, Muammar Gaddafi came to power in Libya and decided to limit oil exports and increase prices. Other producers followed, ratcheting up pressure on Western economies, which relied on oil imports from the Middle East.
In 1973, the crisis came to a head as OPEC countries initiated an oil export embargo following America's decision to supply arms to Israel during the Yom Kippur war. As would be the case today, the embargo had a devastating effect on Western economies, including that of the UK.
Luckily, we'd just discovered that we had some of the world's largest oil reserves in our backyard.
"There won't be oil there" - BP Chairman, 1970
Changes to international law in 1964 meant that national rights over territorial waters suddenly became much greater. Exploration of the North Sea began immediately, but early explorers were discouraged when all they found was gas, the commercial market for which was poor.
BP held licences for several North Sea blocks, but was reluctant to even begin looking for oil... until December 1969, when the discovery of the Ekofisk field in the Norwegian Sea and the Montrose field east of Aberdeen suddenly proved there were sizeable quantities to be extracted.
Late in 1970, BP discovered the legendary Forties field, which has since produced up to 400,000 barrels a day. Shell followed in 1971 with the Brent field, setting the scene for the UK to become a net exporter of oil from 1981 until 2004.
These days, oil and gas is a bit harder to locate than it used to be, but the potential of current techniques such as fracking, horizontal drilling and pre-salt (7km-plus deep) exploration means we're not going to run out any time soon. New supplies of oil are being discovered constantly, mostly in Africa, Central Asia and South America.
Closer to home, the Irish Sea is currently looking very promising, but the big question for Britain is whether the Falkland Islands is going to provide the bonanza that investors are hoping for. Should it happen, the UK could gain access to oil and gas reserves large enough to replace the dwindling resources of the North Sea.
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> Roland owns shares in Royal Dutch Shell but does not own any other share mentioned in this article.