Iraq National Oil Company (INOC)

Iraq's state-owned oil company the Iraqi National Oil Company (INOC) was founded in 1964 and took over all aspects of the industry after nationalisation of the Iraq Petroleum Company until it was dissolved by the government of Saddam Hussein in 1987 into its subsidiary operating companies.

From 2007 onwards, various pieces of legislation were put before the Iraqi parliament proposing the revival of the INOC.

=Creation & Coexistence with IPC=

The company was created to build Iraqi national expertise in the industry, which at the time was still dominated by Western major companies, including the leading consortium in Iraq at the time, the Iraq Petroleum Company (IPC). The INOC was granted exclusive rights under Iraqi law to develop oil concessions in the 99.5 percent of territory that had been expropriated from the IPC by Law 80 in 1961. The INOC chairman of the board was given cabinet rank, to allow the company the political authority to develop.

In 1967 the Iraq-Soviet protocol brought Soviet expertise in to develop the Rumaila field. It was one of a number of agreements with experts from countries outside the companies in the IPC, as the INOC sought to develop its own internal capacities.

=Sole control=

The nationalisation of the industry in stages between 1972 and 1975 left the INOC as sole operator in Iraq. The company managed to increase production from 1.4 million barrels per day (bpd) in 1974 to 3 million bpd 1980, although production was then hit by the outbreak of war with Iran.

But just as it gained sole control over the industry, the Iraqi government imposed more political control. A law in 1976 made the Oil Minister, a political appointee, chairman of the board of the company while another law in 1979 removed all financial independence from INOC, stipulating that all revenues from oil had to pass to the Treasury and that the company would be allocated an annual operating budget by the government.

Upon nationalisation of the IPC, the INOC also took over the IPC subsidiaries the Mosul Petroleum Company and the Basra Petroleum Company, which became the South Oil Company. But a series of Baath Party decrees in the 1980s established a range of new regional operating companies which reported directly to the Oil Ministry, bypassing the INOC.

=Dissolution in 1987=

Iraq's oil industry was hit immediately when war broke out between Iran and Iraq in 1980. Export facilities at Basra and  Khor al-Amaya were damaged in the first weeks. In response, INOC's energies in the 1980s were concentrated on building new export capacity, such as expanding the Kirkuk-Ceyhan Oil Pipeline and building the IPSA pipeline across Saudi Arabia. In addition, the company trucked up to 250,000 bpd through Jordan and Turkey

In April 1987, under newly appointed oil minister Issam Chalabi, Decree 267 merged the INOC with the oil ministry, which became the direct operator in the industry as well as its regulator. Its subsidiaries were now broken off into North Oil Company, South Oil Company and the Oil Exploration Company.

=Mooted recreation=

See also Draft laws concerning hydrocarbons in Iraq

The vast majority of Iraqi oil experts would like to re-establish INOC, including former Oil Minister Ibrahim Bahr al-Uloum, former INOC founding chairman Tareq Shafiq among others.

See: http://www.bakerinstitute.org/publications/Iraq_s_Oil_Sector.pdf

=References=