Iraq: "omens for foreign investment ...are not great" No surprise there.
Carving up the Middle East's resources.
By JAMES DRUMMOND 356 words 14 April 2005 Financial Times London Ed1 Page 23ServiceLine (c) 2005 The Financial Times Limited.
If the birth and tortured early history of Iraq's oil industry are any guide, the omens for foreign investment in the country's hydrocarbon sector are not great.
The full scale of the country's potential became apparent in 1927 when the Baba Gurgur 1 well outside Kirkuk in northern Iraq flowed at 95,000 barrels of oil a day. By then, the country had become the scene of operations of the infamous Calouste Gulbenkian, an Armenian trader born in Istanbul who founded the Turkish Petroleum Company and became known as Mr Five Per Cent because that was his share of TPC.
In its first incarnation, the other shareholders in the TPC were Anglo-Persian - better known today as British Petroleum - Royal Dutch/Shell and Deutsche Bank. After the First World War, Deutsche lost its stake.
Subsequently, the CFP, the French state-owned oil company, and the Near East Development Company, consisting of Standard Oil of New York and Standard Oil of New Jersey, joined the consortium. The Turkish Petroleum Company then morphed into the Iraq Petroleum Company but not before Gulbenkian had committed his partners in the TPC to the famous Red Line agreement in 1928.
Under the accord, none of the TPC partners was allowed to invest inside a specified area without the agreement of the others. The area was massive, covering most of the area of the old Ottoman empire. It included Turkey in the north but excluded Kuwait and Iran. Gulbenkian thus had an effective veto on investment by many of the world's leading oil companies in what became the most lucrative oil play in the world. The veto earned him a fortune and obstructed the US attempts to exploit
Middle East oil.
In its first incarnation, the Turkish Petroleum Company had secured a concession in Iraq until 2000 in which the company paid royalties to the Iraq government of just 15 cents a barrel. The concession was unilaterally revoked in the early 1960s by the radical government of Abdel Karim Qassim that ousted the monarchy. |
