The Press MONDAY, APRIL 13, 1959. Iraq Oil

Press, Volume XCVIII, Issue 28868, 13 April 1959, Page 10

The Press MONDAY, APRIL 13, 1959. Iraq Oil

Disquieting indications of Communist influence in Iraq have Increased concern about the future of Western oil interests in that country. Iraq oil is the product of investment by a combine of British, Dutch, American, and French companies, which have invested huge sums not only to explore for and produce oil, but to lay the pipelines and the port facilities necessary to give Iraq oil a market value. The investors have done well out of their enterprise, though Iraq has not been the oil Eldorado that many suppose. For one thing, investment in Iraq oil has involved heavy political risks, as witness the almost forgotten Haifa pipeline. Because of Arab-Jew hostility this pipeline, built to carry Iraq oil to a Mediterranean terminal, has been a dead loss for 11 years. Again, prolific production of the original Iraq oilfield at Kirkuk since it began export production in 1934 has tended to obscure the relatively poor returns brought by heavy investment in exploring in other parts of the country. The three major fields—Kirkuk in the north (by far the largest producer) and Rumaila and Zubair in the south—still have no worthy successors. However, Western investment has made Iraq one of the world’s major oil-producing countries. Last year, the set-back caused by the destruction of pumping stations on the pipeline through Syria was overtaken, and export production was about 35 million tons. Plans are now in progress to increase exports to 50 million tons a year. These plans involve putting extra pipelines into the system from the northern fields, and spending £25 million on shipping terminals in the difficult Shaft al Arab, at the head of the Persian Gulf. In common with other countries in the Arab world, Iraq profits considerably through the exploitation of its oil resources by the Western world. Apart from bringing very remunerative employment to the native populations, the oil companies have a financial agreement with the respective countries that amounts to a fifty-fifty profitsharing arrangement. In Iraq’s case, its share of the profits amounted to more than £BO million last year. It would be logical to presume that it would be a first interest of any regime in Iraq to protect so valuable

an asset, and by doing so safeguarding a vital source of the oil upon which Europe depends for much of its energy. The Iraqi regime knows as well as anyone that its market terminals are directed towards Western markets, and that new pipelines and terminals directed to other markets could not be constructed except at huge cost in money and time. The Western world would have reasons for less than its present concern if doubts about the future of Iraq oil concerned nothing more than the ratio at which profits should be divided, or even an Iraqi demand for partial ownership of the oil enterprises. There is no gainsaying that proposals of this nature could have most serious effects upon the whole system of relationship between the Western oil companies and the Arab oil-producing countries. But even graver possibilities are threatened by the power that might pass to Russia with increasing Communist influence in Iraq. Russia does not want Iraq oil for its own needs, which are amply met from Russia’s own resources and from those of its satellites. Russia would certainly flinch at the stupendous cost of building pipelines to cross the many miles of mountainous terrain between North Iraq and the Caspian. But it would be highly advantageous to Russian policy to control a vital source of Western oil, and to hold Europe under duress. It would matter little to Russia if Iraq were ruined in the process. But Russia would not need to carry things to extremes. At Russia’s direction a Communist regime in Iraq could play a game that would be thoroughly embarrassing for the West, and might indeed become intolerable. It is necessary only to visualise Russia among the Persian Gulf States, including Kuwait, the greatest oil producer of them all. It must be hoped that the present negotiations between the Iraq Petroleum Company and the Iraqi Government will serve to maintain a mutually advantageous commercial partnership. The West cannot fail to have misgivings now events in Iraq are showing that the country which, less than a year ago, was a bulwark of Western policy in th? Middle East is coming increasingly under Communist and Russian influence.