Red Line Agreement

The aim of the agreement was to formalize the corporate structure of TPC and bind all partners to a "self-denial clause" that prohibited any of its shareholders from independently seeking oil interests in the ex-Ottoman territory.

As Giacomo Luciani (2013) writes: "Having formed IPC, [Calouste] Gulbenkian insisted that participants in the consortium sign what became known as the Red Line Agreement (Yergin 1991: 203–6).

"[6]It has been said that, at a meeting in 1928, Gulbenkian drew a red line on a map of the Middle East demarcating the boundaries of the area where the self-denial clause would be in effect.

Within the “red line” lie the entire ex-Ottoman territory in the Middle East including the Arabian Peninsula (plus Turkey) but excluding Kuwait.

The writer Stephen Hemsley Longrigg, a former IPC employee, noted that "the Red Line Agreement, variously assessed as a sad case of wrongful cartelization or as an enlightened example of international co‑operation and fair-sharing, was to hold the field for twenty years and in large measure determined the pattern and tempo of oil development over a large part of the Middle East".

[9] Apart from Saudi Arabia and Bahrain where ARAMCO and BAPCO prevailed, IPC monopolized oil exploration inside the Red Line during this period.