''Oil Development in Iraq: A Century of Turmoil, Discord and Promise.''
Oil development in Iraq started against a background of armed conflict, political turmoil, and corporate rivalry in the aftermath of World War I. A company called Turkish Petroleum Company (TPC), representing British, German and Dutch interests and the interest of Calouste Gulbenkian was established in 1912 to exploit Mesopotamian oil. After the war, the German interest passed on to the French, and a syndicate of Americans oil companies made their way into TPC. Secret agreements and self-serving rhetoric were employed to obtain oil concessions.
The Red Line Agreement signed in 1928 ratified the monopolistic character of TPC and marked the birth of a vast oil cartel. After much wrangling, the agreement was scrapped in 1948 following strong protestations from the American partners who wanted to enter Saudi Arabia. Nonetheless, TPC managed to operate as a monopoly within Iraq. Changing its name to Iraq Petroleum Company in 1929, the company operated as a production company supplying oil to its partners at a nominal fee. The Kirkuk field was the focus of the activities.
After nationalization in 1972/73, Iraq’s oil production suffered severely by the Suez crisis, the Iran-Iraq war, and the Gulf War. Proved oil reserves, estimated at 112 billion barrels, and little changed over the years, should be treated with much caution. Many of the producing fields are suspected to have suffered reservoir damage. Political and legal imponderables aside, the revival of Iraq’s oil industry will require massive investment to the tune of $40 billion to repair/upgrade the facilities and to re-develop mature fields. No significant boost in oil production is expected within the next 5 years. Exploration holds much promise.
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