BP plc
Integrated Oil & GasFounded 1909- Updated July 2025
Reviewed by Swet Parvadiya
Last reviewed: July 2025
CorpDigest
BP plc
Company History
Founded 1909 in London, United Kingdom
Last reviewed: 2025-07-15 · By Swet Parvadiya
Founded in 1909 after British prospectors discovered oil in the Zagros Mountains of what is now Iran, BP built its empire on concession agreements with sovereign governments, refinery networks, global shipping routes, and retail fuel stations that turned a Middle Eastern discovery into a global brand. The institution traces its origins to 1901, when William Knox D'Arcy secured a petroleum concession across 500,000 square miles of Persia.
William Knox D'Arcy obtained the original concession from the Persian Shah in 1901 that ultimately led to the founding of the Anglo-Persian Oil Company. For seven years between 1901 and 1908, D'Arcy personally funded exploration drilling in Persia at enormous cost — spending the equivalent of many millions of modern dollars before the breakthrough discovery at Masjid-i-Suleiman in May 1908. Though he partnered with the Burmah Oil Company in 1905 when his resources were nearly exhausted, D'Arcy retained a significant financial interest in the newly formed Anglo-Persian Oil Company and served as a director from its incorporation in 1909 until his death in 1917. He is widely credited as the individual most responsible for the discovery of Middle Eastern oil and the founding of what would become one of the world's most powerful energy companies. D'Arcy received relatively modest personal recognition during his lifetime for a discovery that transformed global geopolitics, economics, and the physical landscape of the 20th century.
William Knox D'Arcy obtains a 60-year oil exploration concession from the Persian Shah covering approximately 500,000 square miles — roughly three-quarters of Persia — in exchange for Â$25,400 cash and a 16% profit royalty, laying the foundation for the company that will become BP.
After seven years of expensive and largely unsuccessful drilling, field manager George Reynolds strikes commercial-quality oil at Masjid-i-Suleiman in western Persia on May 26, 1908. The well produces approximately 5,000 barrels per day — the first major commercial oil discovery in the Middle East and one of the most consequential geological discoveries in history.
The Anglo-Persian Oil Company is formally incorporated in April 1909, with William Knox D'Arcy and the Burmah Oil Company as principal backers. The company begins construction of the Abadan refinery on the Persian Gulf and a 140-mile pipeline from the Masjid-i-Suleiman field.
The British government, at the urging of First Lord of the Admiralty Winston Churchill, purchases a 51% controlling stake in Anglo-Persian for approximately Â$2.8 million. Churchill's strategic rationale is to secure domestic British control over oil supplies for the Royal Navy's conversion from coal to oil propulsion — a conversion that would give British ships a decisive speed advantage over German vessels in the coming war.
Following the 1953 resolution of the Iranian nationalization crisis and the Shah's restoration to power, the company renames itself British Petroleum Company. A new oil consortium replaces the exclusive Anglo-Iranian concession, giving American, Dutch, and French oil companies their first equity stakes in Iranian production while British Petroleum retains a 40% share.
BP discovers the Forties Field in the UK North Sea — one of the largest oil fields ever found in British territory — containing an estimated 4 billion barrels of recoverable oil. This discovery transforms BP's strategic position, providing a stable, politically secure production base at precisely the moment when Middle Eastern supply security was becoming uncertain.
The Thatcher government completes the privatization of its remaining 31.5% stake in BP through a global share offering timed for October 1987 — weeks before the global stock market crash known as Black Monday disrupted the sale and left underwriters with unsold shares. The privatization is eventually completed and marks BP's transformation from a state-controlled strategic asset to a fully commercial publicly traded company.
BP merges with Chicago-based Amoco Corporation in a deal valued at approximately $48.2 billion — the largest industrial merger in history at the time. The combined company becomes BP Amoco, with operations in 100 countries and production of approximately 2.5 million barrels per day. The merger gives BP a commanding US retail fuel presence through Amoco's 9,000+ service stations and significant Gulf of Mexico and North American upstream assets.
Under CEO Sir John Browne, BP launches the 'Beyond Petroleum' rebranding campaign, introducing the sunflower logo still in use today and publicly positioning the company as an energy company committed to addressing climate change. BP invests in solar energy through its BP Solar subsidiary and becomes the first major oil company to acknowledge the scientific consensus on climate change — a positioning that earns significant media attention but whose financial substance remains limited at this stage.
The Deepwater Horizon drilling rig, operating on the Macondo well in the Gulf of Mexico under contract to BP, suffers a catastrophic blowout on April 20, 2010, killing 11 workers and triggering the largest marine oil spill in US history — approximately 4.9 million barrels of crude oil released over 87 days. BP ultimately pays more than $65 billion in total costs including cleanup, compensation, fines, and legal settlements.
Under new CEO Bernard Looney, BP announces the most ambitious climate commitment made by any major oil company — pledging to reach net-zero emissions by 2050, cut oil and gas production by 40% by 2030, and invest up to $5 billion per year in low-carbon energy. Simultaneously, BP cuts its dividend by 50% — the first reduction since 1992 — citing the COVID-19 demand collapse and the need to fund the transition strategy.
New CEO Murray Auchincloss, who replaced the disgraced Bernard Looney in January 2024, presents a revised strategy that moderates several of the most aggressive low-carbon targets while maintaining the 2050 net-zero commitment. BP reduces its annual low-carbon capital expenditure guidance, sells offshore wind assets in Europe, and prioritizes Gulf of Mexico development and LNG trading as the primary growth drivers through 2030.
BP's acquisition of Chicago-based Amoco Corporation was driven by the strategic logic of combining BP's European and global upstream assets with Amoco's extensive North American portfolio — particularly Amoco's significant positions in the Gulf of Mexico deepwater, the Permian Basin, and Rocky Mountain natural gas. The merger also gave BP a commanding US retail fuel presence through Amoco's approximately 9,000 service stations, predominantly in the Midwest and Southeast. At $48.2 billion, it was the largest industrial merger in history at the time of its announcement in August 1998.
The $27 billion acquisition of ARCO followed the Amoco deal and was motivated primarily by ARCO's Alaska North Slope production assets — including a 22% stake in the Prudhoe Bay field (the largest oil field in North America) and associated infrastructure — and its significant deepwater Gulf of Mexico portfolio. ARCO's ARCO-branded retail fuel stations on the US West Coast (primarily California and the Pacific Northwest) also provided BP with a major retail fuel presence in the western United States.
BP acquired Castrol — the world's leading premium lubricant brand — for approximately $4.7 billion as part of its strategy to build a high-margin, branded consumer products business that would be less cyclically sensitive than its upstream and downstream commodity operations. Castrol's global brand strength, particularly in Asian automotive markets, and its technology leadership in synthetic lubricant formulation made it a compelling acquisition target that no other oil major had managed to secure.
BP's acquisition of a 43% stake in Lightsource Renewable Energy — which it subsequently increased to approximately 51% — was the most tangible early financial commitment to the 'Beyond Petroleum' strategy articulated under CEO John Browne and later Bernard Looney. Lightsource was one of Europe's largest solar developers, with a portfolio of utility-scale solar farms in the UK, Ireland, and continental Europe, and was expanding into the United States and India. The acquisition gave BP a credible operational platform in utility-scale solar without requiring it to build solar development capabilities from scratch.
BP traces its origins to May 1908 when William Knox D'Arcy's Anglo-Persian Oil Company struck oil at Masjid-i-Suleiman in Persia (modern Iran), the Middle East's first commercial petroleum discovery, after seven years of exploration nearly bankrupted D'Arcy. The British government acquired 51% of Anglo-Persian in 1914 to secure naval fuel supplies, creating a state-influenced energy company that would shape British foreign policy for 60+ years. The company expanded operations across the Middle East, becoming dominant Iranian oil producer until Mohammad Mossadegh's 1951 nationalisation triggered the British-American coup restoring the Shah. Anglo-Persian was renamed Anglo-Iranian Oil Company (1935) and then British Petroleum (1954), gradually diversifying beyond Iran after the nationalisation crisis demonstrated political risks of single-country concentration.
BP's Deepwater Horizon offshore drilling rig exploded on April 20, 2010, killing 11 workers and triggering the largest oil spill in US history with 4.9 million barrels released into the Gulf of Mexico over 87 days before the well was sealed. The disaster cost BP $69+ billion in cumulative settlements, cleanup costs, and litigation through 2024, including $20.8 billion DOJ settlement (2016, largest US environmental fine ever), $13 billion to BP shareholders in securities class action, and ongoing claims from Gulf Coast businesses and residents. BP's market cap fell from $187 billion peak to $26 billion at low point, requiring $30 billion in asset divestitures to fund spill response. CEO Tony Hayward was replaced after his 'I'd like my life back' comment generated global outrage, and BP's strategic ambitions were fundamentally constrained for a decade by the financial and reputational damage.
BP CEO Bernard Looney announced in February 2020 — just months before COVID-19 collapsed oil demand — the most aggressive energy transition strategy of any major oil company, committing to net-zero emissions by 2050, 40% reduction in oil and gas production by 2030, and $5 billion annual low-carbon investment versus traditional $1 billion. The strategic shift bet that energy transition would accelerate faster than competitors expected, positioning BP as 'integrated energy company' rather than oil company. However, Looney's strategy was scaled back after his resignation in September 2023 over undisclosed personal relationships, and successor Murray Auchincloss reversed the oil production reduction target in 2024, returning to more conventional oil and gas focus. The strategy reversal reflects investor pressure to maintain profitable oil business and continued energy demand requiring traditional production through 2030+.
BP's recovery from Deepwater Horizon required nearly a decade of asset divestitures totalling $75 billion, replacement of senior management, and rebuilding of operational and safety cultures, with the company eventually returning to growth around 2018-2019 before COVID-19 created new challenges. Recovery milestones included settling government claims (2016), returning to dividend payments and buybacks, expanding renewable energy investments, and rebuilding US Gulf operations under stricter safety protocols. By 2024, BP's market cap of $80 billion represented partial recovery from $26 billion 2010 lows but remained below 2007 peaks of $260+ billion, demonstrating how operational disasters create permanent valuation impairments even after financial recovery. The post-spill BP became more cautious in operations but also more constrained in growth ambitions, with smaller competitive footprint than pre-2010 era.
On March 12, 1968 the Atlantic Richfield-Humble Oil partnership announced the Prudhoe Bay discovery on Alaska's North Slope, but it was BP, drilling on the adjacent State Lease 13 acreage at well Put River No. 1 and Sag River State No. 1 in 1969, that confirmed the field as the largest oil discovery in North American history, ultimately holding roughly 25 billion barrels of original oil in place and more than 13 billion barrels of recoverable reserves. BP held the largest single working interest in the field at around 50% and, alongside seven partners, financed and built the 800-mile, $8 billion Trans-Alaska Pipeline System (TAPS) from Prudhoe Bay to Valdez, completed in 1977 after a three-year construction effort employing more than 70,000 workers. First oil flowed through the pipeline on June 20, 1977, and Prudhoe peaked at roughly 1.5 million barrels per day in 1988, accounting for about 25% of total U.S. crude oil production. The Alaska position gave BP its first major foothold in the United States and the cash flow that, when paired with its 1987 Standard Oil of Ohio (Sohio) buy-in completion, funded the company's transformation from an Iran-dependent British concern into a vertically integrated transatlantic major. Alaska remained core for decades until BP sold its Alaska business to Hilcorp for $5.6 billion in 2020 to refocus capital on its energy transition strategy.