Iraq Petroleum Company

Founded oil company in 1927 and replacing the Turkish Petroleum Company for the oil exploitation in Iraq, the IPC was a company with Western capital distributed as follows:

23,75% Royal Dutch Shell
23,75% British Petroleum Co. (BP)
23,75% NEDEC (Near East Development Corporation, itself 50% Mobil and 50% Esso) with American capital
23,75% French Company of oils (CFP), Total ancestor of
5% Calouste Sarkis Gulbenkian (called " Mr Five Pourcent")

This company held a concession on the near total of the territory of the Iraq and had developed in other countries of the the Middle East. True State in the State, it was almost the only international partner of Iraq, and was nationalized in 1971.

History

In 1912, several rival companies were linked to create the Turkish Petroleum Company (TPC) in order to obtain a concession of exploration in Iraq. The objective of origin of the TPC was to eliminate the competitions among the partners and to precede the researchers of concessions American S. the main actor in the TPC was Calouste Gulbenkian, which had been employed by the banking interests British because of its knowledge and its capacity to influence the decisions of the Turkish government. Its capital of 5 pourcent in the TPC is famous to have made of him the richest man of the world during many years, and was at the origin of its nickname, “Mr Five Pourcent”.

The establishment of the TPC did not eliminate the competition among the shareholders who represented various national interests. The the United Kingdom had an strategic interest of long time in Mésopotamie because of its site with respect to the British Armée and of the roads towards the India. The decision of the British government, before the First World War, to convert the propulsion of its Flotte of the coal to the Pétrole further increased the importance of this zone. Towards 1914, the Oil company anglo-Persian, controlled by the British government, had repurchased 50% of the shares of the TPC and made pressure on the Turkish government so that it grants to the Oil company anglo-Persian a concession; but the First World War delayed the Négociation S.

The First World War revealed with the great powers the importance to guarantee the safety of their oil resources. The Franco-British conference of San Remo in 1920 granted a permanent British control of all the established companies, in order to develop oil mésopotamien, but it allocated 20% with the Iraqi interests if they chose to invest. The France claimed the shares German are TPC which had been seized like properties of the enemy, and it formed the French Company of oil (CFP) to maintain the shares French in the TPC. The governments Italy N and states-unien protested against their exclusion. After long and rough diplomatic exchanges, the American oil companies were authorized to repurchase within the TPC, although the Négociation S were completed only in 1928.

The accession of the the United Kingdom to a mandate on the Iraq in 1920 does not guarantee to the TPC an exclusive concession. By using the promise of a concession of the Turkish government of pre-war period, the TPC started of the negotiations to have of them one in 1921. The Contentieux related much to the 20% of share of Iraq on all the companies of oil development, condition which was stipulated at the time of the conference of San Remo. At the beginning of the Years 1920, the TPC consisted almost entirely of oil companies which did not want a representation or of Iraqi interference in the management of the TPC. They succeeded in resisting the Iraqi efforts to take part in spite of the pressure exerted by the British government in order to accept the Iraqi shareholders.

The TPC obtained a concession in March 1925. As of its beginning, many Iraqis felt misled. It was to last seventy-five years and to cover twenty-four pieces. The Iraqi government was to receive Redevance S ata uniform rate per ton, to pay in British Pound sterling, but with a clause on gold to guard itself against a devaluation of the book. The payments of royalties were related to the profits of the oil companies, but this clause later only fell in disuse twenty years. The Iraqi government had the right of Taxe R the TPC to the same rate as that practiced for other industrial fields. The TPC was to build a Raffinerie to satisfy the domestic needs for Iraq, and a Pipeline for the export of the Pétrole gross. The Iraqi government had the right to rent other pieces for exploration and the development tankers, and the TPC was not excluded from the invitations to tender on these additional pieces.

The TPC began exploratory drilling after the concession was ratified by the Iraqi government. One discovered oil in the proximity in the north of Kirkuk the October 15th 1927. Many a ton S was poured before one could control the well. This indication of the existence of a broad oil-bearing field and value proved soon to be quite founded.

The discovery off oil hastened negotiations over the composition and the functions off TPC. The shareholders signed has formal in July 1928 agreement. The Anglo-Persian Oil Company, the Dutch Shell Group, the CFP, and the Near East Development Corporation (which represented the interests off five broad American oil companies) each held 23.7 bore off the shares, and Gulbenkian the remaining, goal nonvoting, 5 bore. TPC was organized ace has nonprofit company registered in Britain that produced crude oil for has fairy for its relative companies, based one to their shares. TPC was limited to refining and marketing for Iraq' S internal needs to prevent any competition with the relative companies. The Anglo-Persian Oil Company was awarded has 10 bore royalty one the oil produced, ace compensation for its reduced share in TPC.

With major obstacle facing United States firms had been clause in the 1914 off reorganization has the TPC that stipulated that any oil activity in the Othoman Empire by any shareholder would Be shared by all partners. Gulbenkian had insisted one the clause so that the oil companies could not circumvent his interests by establishing other companies without him. This arrangement, continued in the 1928 reorganization, cam to Be known ace the Red Line Agreement because the TPC partners were forbidden to act independently within the boundaries off the now-defunct Othoman Empire. This " red line" effectively precluded the United States and other TPC partners from concession hunting and from oil development in much off the Persian GULF area until after World War II.

In 1929 the TPC was renamed the Iraq Petroleum Company (IPC). Various IPC represented oil companies that had and sometimes conflicting interests. The Anglo-Persian Oil Company and Standard Oil off New Jersey (also known ace Esso and subsequently known ace Exxon), for example, had access to major sources off crude oil outside Iraq, and they therefore wished to hold the Iraqi concessions in reserve. CFP and other companies, in contrast, pushed for rapid development off Iraqi oil to augment to their shorts crude oil beg.

IPC' S relative companies delayed development off the Iraqi fields, and IPC' S concession expired because the companies failed to meet unquestionable performance requirements, such ace the construction off pipelines and off shipping terminals. IPC' S concession was renegotiated in 1931. The new contract gave IPC has seventy-year concession one year enlarged 83,200-public garden-kilometer area, all east off the Tigris River. In return, however, the Iraqi government demanded and received additional payments and loans ace well ace the promised that IPC would supplements two oil pipelines to the Mediterranean by 1935.

Iraqi politicians remained suspicious off IPC' S justify. Many Iraqis believed that IPC was deliberately withholding Iraqi crude from the market to boost the price off the relative companies' oil produced elsewhere. In 1932 Iraq granted has seventy-five-year concession to the British Oil Development Company (BODC), created by has off group Italian and British interests, to 120,000 public garden kilometers west off the Tigris River. Favorable The terms were more to the Iraqi government than those off earlier agreements. BODC financing was insufficient, however, and the company was bought out by IPC in 1941 and was renamed the Mosul Petroleum Company (MPC). IPC shareholders asserted to their monopoly position again when they won the concession rights to southern Iraq and in 1938 founded the Basrah Petroleum Company (BPC) ace to their wholly owned subsidiary to develop the area.

Transport remained the hand obstacle to the efficient export off Iraqi oil. When France joined IPC after World War I, it wanted the Iraqi pipeline to transit its elects in Syria to has coastal final At Tripoli, Lebanon. The Iraqis and the British preferred has final At Haifa, in Palestine. In 1934, has pipeline was completed from the Kirkuk fields to Al Hadithah, where it divided, one branch going to Tripoli (the Tripoli branch was closed by Syria--which supported Iran--in 1982 after the outbreak off the Iran-Iraq War in 1980) and the other to Haifa (the Haifa line was closed in 1948). In 1938, nine years after the discovery off oil, Iraq began to export oil in significant quantities. Iraqi production averaged 4 million let us tons per year until World War II, when restricted shipping in the Mediterranean forced production down sharply.

Source: U.S. Library off Congress

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