These days coincide with the anniversary of Iraq’s decision to nationalize oil in the early seventies of the last century and end the control of foreign companies on this important wealth with the complete nationalization of all assets and oil production in the country.
This decision came as a result of Iraq’s dissatisfaction with the way foreign oil companies manage production levels in the country, based on their commercial interests elsewhere, and there were many disputes regarding pricing, as it demanded a 20% share of the Iraq Petroleum Company, but the foreign companies formed To a coalition of this company did not agree to that. Read also Former Iraqi Minister: The future of Iraq is not in oil It has the third reserves in the world.. Learn about the Al-Mishraq sulfur fields in Iraq In the video.. Learn about the breakwater of the Iraqi port of Al-Faw, which has a Guinness certificate
The first seeds of nationalization
The researcher in Iraqi economic affairs, Nabil Jabbar Al-Ali, says, “Iraq reached an agreement to equal profits with the oil concession companies in February 1952, after a series of political pressures on the Nuri Al-Saeed government, which prompted it to conduct negotiations with the concession companies, which were forced to accept and sign the agreement.” .
Al-Ali added that the Iraqi Reconstruction Council – which was formed after the visit of the World Bank mission to Iraq in 1952 – put forward a reconstruction and development policy that remains in memory to this day, and was able to achieve a set of successes in only 7 years until 1958, taking advantage of the steps taken by Iraqi politicians To increase the state’s resources, which contributed to setting the first steps of development, which is the “nationalization of oil.”
The nationalization of oil in Iraq on June 1, 1972 marked the beginning of the end of the control of the oil monopolies of foreign companies. It is also considered – according to academics – “one of the important political and economic measures in terms of the time context, its adoption and the nature of the factors and considerations that imposed it and the results that resulted from it.”
According to the law, according to academics’ research, Iraq transferred all the money, rights and assets that devolved to the state from that to a new government company called the “Iraqi Company for Oil Operations” to be managed by the employees and workers of the nationalized Iraq Oil Company.
Why did he make the decision?
The former director general of the Iraqi Oil Marketing Company, Dr. Falah Al-Ameri, believes that the decisions taken by successive governments regarding the oil and gas industry in Iraq, starting with Law No. 80 of 1960 to control its oil industry and to increase exploration and national production, according to which Iraq seized 99.5% of Iraqi lands. From the control of foreign oil companies, whose shares have been stabilized since 1928, as follows: British Oil Company 23.75%, and the same percentage for each of the Dutch Shell companies, French Oil, and American Oil, and Gulpnikan’s share was 5%.
Al-Amiri added during his speech to Al-Jazeera Net that “the nationalization law was a reaction to the intransigence of international companies that refused to change contracts of the concession clauses, increase the proportion of Iraq in production and intervene more to control the country’s oil industry, which prompted the then Iraqi President Ahmed Hassan Al-Bakr to issue the nationalization law, which was a risk.” economic and political.
Al-Amiri attributed the success of the nationalization to “the international circumstances at the time, especially the Arab-Israeli war in October 1973, which contributed to Iraq’s continuation of the nationalization process, as Dutch and American quotas were nationalized as punishment for their countries’ support for Israel during that war.”
The Organization of Petroleum Exporting Countries (OPEC) fully supported the government’s takeover of the Iraq Petroleum Company, offering loans to help meet the foreign exchange shortage caused by the loss of revenue from the Iraq Petroleum Company.
The dispute was settled in 1973 between the government and the Iraq Petroleum Company, whereby the company agreed to pay about $ 350 million in compensation for lost revenues to Iraq over the years when the company was selling its oil.
In return, the Iraqi government agreed to provide the company with 15 million tons of Kirkuk crude oil free of charge, valued at more than $300 million, as part of the final settlement between the two parties.
Future problems
Al-Amiri said that the decisions to nationalize oil during the period from 1972-1975 came as a result of political developments and many disagreements, such as oil pricing and Iraq’s uneasiness with the way in which the Iraq Petroleum Company was managed, its share in the company and the weak production growth.
He adds that “despite the importance of the decision to liberalize the Iraqi oil industry, it provided the ground for Iraq’s involvement in the war with Iran, as a result of the high rate of Iraqi oil production by Iraqi oil experts, competencies and cadres, and the promising plans that were prepared to increase production significantly.”
For her part, the former parliamentarian, Dr. Sabah Al-Tamimi, said in an interview with Al-Jazeera Net, that “the Iraqi leadership, when it took the decision to nationalize oil at the time, bet on the national will of the Iraqi people,” considering that it was “a narrow and non-comprehensive view as it adopted the topic of nationalization and neglected the ambitions of the great countries for oil and gas wealth. owned by Iraq.
In addition, the great powers viewed Iraq as an underdeveloped third-world country, according to Sabah Al-Tamimi. Therefore, these countries began to engross intrigues and plots in order to take all political and economic measures to weaken Iraq’s role in the Arab and international arenas.
current reality
The media spokesman for the Iraqi Ministry of Oil, Assem Jihad, said, “The oil industry in Iraq has gone through great developments, especially after the nationalization decision in 1972, but all projects were stopped after Iraq entered the war with Iran (1980-1988), which damaged the oil industry and led to the suspension and distancing of production operations. about modern technology.
Another factor that directly affects the national oil capabilities is the second Gulf War and the subsequent imposition of the economic blockade on the country, in addition to the scaling back of the oil and export industry, which Jihad considered the main point of the “oil-for-food” agreement under UN Security Council Resolution No. 986. For the year 1995, which sets a certain amount for oil export outside Iraq.
After 2003, the body of the oil sector was also not healthy due to previous accumulations and effects. However, the Iraqi Ministry of Oil, according to Jihad, developed plans to increase daily production rates because Iraq depends directly on oil exports to finance the federal financial budget.
Jihad points out that “Iraq has developed its oil fields by attracting foreign investments and contracting with solid multinational companies, as well as licensing rounds that contributed to the success of the oil industry after the years of oil backwardness due to the events that took place before 2003.”
He adds that oil exports after 2003 were also damaged due to frequent attacks on export pipelines and fields, in addition to the war on the Islamic State, which directly targeted the provinces’ fields and steal oil by extracting it in a rudimentary manner.
But a spokesman for the Iraqi Oil Ministry confirms that this will not affect the ministry’s efforts to develop black gold industries, whose production has increased to more than 3 million barrels per day.