Nationalisation of Iraqi Oil Industry

Iraq gradually took control of its own oil industry from international oil companies in a process which began in 1961 and ended in 1975 with complete nationalisation of all assets and production in the country.

Prelude
From 1961, when the revolutionary regime of Abdel Karim Qasssim passed a law depriving the Iraq Petroleum Company (IPC) of the right to prospect in 99.5% of Iraqi territory, Iraq envisaged the creation of a nationally owned and run oil industry. The creation of the Iraq National Oil Company (INOC) in 1964 confirmed this, even if the INOC was originally set up with limited powers

Expropriation of IPC assets
During the late 1960s and early 1970s Iraq continued to be dissatisfied with the way the IPC managed production levels in Iraq based on their commercial interests elsewhere, and there were various disputes about pricing. Iraq also demanded a 20% equity stake in IPC, something which the San Remo Conference of the great powers in 1920 had envisaged but which the international partners in the IPC had denied them. On the back of the rising tide of economic nationalism in Iraq and more broadly across the Middle East, the IPC offered in May 1972 to increase the Iraqi state's profits, raise production, and agree to some advance payments on royalties. But the offers did not prove enough and on the 1 June 1972 the Iraqi government expropriated all of the IPC's assets in Iraq. Saddam Hussein, then formally vice-president to Ahmed Hassan al-Bakr, led the nationalisation process for the Baath Party. Only the parent company IPC was affected by this move. Neither the Mosul nor the Basrah companies were included.

In 1973, Iraq and the IPC settled their claims and counter-claims. The IPC agreed to pay nearly US $350 million to Iraq as compensation for revenue lost to Iraq over the years when IPC was selling Iraqi oil. In return, the government agreed to provide to IPC 15 million tons of Kirkuk crude free of charge, valued at the time at over $300 million, in a final settlement of IPC claims. The Mosul Petroleum Company surrendered its concession to the government.

Nationalisation of the Basra Petroleum Company
Even following the outbreak of the 1973 Yom Kippur war, Iraq did not nationalise the entire Basra Petroleum Company (BPC). On the 7 October the government announced that it had nationalised the shares of the American companies (Exxon and Mobil) in retaliation for the United States' support of Israel, and later that month it also nationalised the shares of Royal Dutch Shell for similar reasons. However in December 1975 President Bakr announced the complete takeover of foreign interests in the BPC, completing the nationalisation process.

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