National Iranian Oil Company

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National Iranian Oil Company
legal form
founding April 30, 1951
Seat Tehran , IranIranIran 
management Gholam Hossein Nozari (Minister of Oil)
sales $ 200 billion (2011)
Branch Petroleum , natural gas
Website www.nioc.ir

The National Iranian Oil Company ( NIOC ) is an Iranian company with headquarters in Tehran . The company is a state-owned company and belongs to the Iranian Ministry of Petroleum . The ministry is responsible for the development and organization of the oil market in Iran. The company was founded on April 30, 1951. A 2019 study found that National Iranian Oil Company was the world's fifth highest- emitting company during this period, emitting 35.66 billion tons of CO 2 equivalent since 1965.

Founding history

NIOC logo (until 1979)

The establishment of the NIOC is closely related to the nationalization of the Iranian oil industry. The parliamentary decision on nationalization was made by Prime Minister Hossein Ala on March 15, 1951. The oil plants of the Anglo-Persian Oil Company were taken over by the newly founded National Iranian Oil Company (NIOC) and the oil business was continued "for its own account".

After the Abadan crisis triggered by the Mossadegh government and the fall of Mossadegh (→ main article: Operation Ajax ), the oil production concession was renegotiated. With the Iranian Government from 1954 was valid between a consortium of international oil companies consortium agreement negotiated with a term of 25 years. The extraction, processing and distribution of the oil products were no longer reserved exclusively for the AIOC. In addition to the AIOC, Shell from the Netherlands, Jersey and other smaller companies from the USA and the Compagnie Francaise de Petroles (CFP) from France were also involved. As part of the consortium agreement, two London-based companies based in Iran were founded under Dutch law, Iranian Oil Exploration and Producing Co. and Iranian Oil Refining Co. These two companies were 100% owned by Iranian Oil Participants Ltd, which was also newly founded . based in London, whose shares were shared by the companies named in the consortium agreement. Another newly founded company based in London is Iranian Oil Services Ltd., which supplies the technical equipment for oil production and refining. This company is also 100% owned by the consortium partners. 50% of the profits of the companies were transferred to the Iranian state. As compensation for the nationalization and the abandonment of the monopoly on the extraction of Persian oil, so to speak as a transfer fee for the concession from 1933, the AIOC received $ 20 million from the oil companies of the consortium agreement for 10 years. The Iranian state paid as compensation for the nationalization of AIOC's industrial facilities $ 2.5 million per year. After the conclusion of the contract, the "old AIOC" ceased to exist. The name of the existing company was then changed from AIOC to British Petroleum Company, now BP.

In this agreement, the NIOC was only responsible for the "non-basic functions" such as training of employees, public transport, maintenance of the roads, houses for the workers and employees, their medical care and social services. The NIOC only managed the sale of the oil products in Iran, the exploitation of the small Naft-i-Shah oil field and the operation of the refinery in Kermanshah.

The term of the consortium agreement ended in 1979.

Expansion of oil and gas production

The oil town of Abadan, 1960

After the consortium agreement was concluded, oil production in Iran was resumed and continuously expanded. One focus of the oil field was Gach Saran the OSCO in southwestern Persia. In 1968, Iran produced 2,847,580 barrels per day, making it the largest oil producer in the Middle East and the fourth largest oil producer in the world after the USA, the USSR and Venezuela. In 1968 the goals of the NIOC were described by then President Manutschehr Eghbal as follows:

  1. Expansion of Iran's oil industry and increase in oil business revenues.
  2. Providing the funds for the construction of Iran.
  3. Expansion of the international influence of the NIOC.

With the expansion of the production capacity, the income also increased considerably. While in 1954 the income of the NIOC was 3.1 million British pounds, in 1968 it was already 337.7 million British pounds.

The start from an oil company, small on an international scale, to one of the leading oil producers was extremely difficult. 90% of the oil market was controlled by the international oil companies in the 1950s. The only way for Iran was to develop its oil industry if it succeeded in doing business with other partners. Shah Mohammad Reza Pahlavi contacted Enrico Mattei , president of the Italian oil and energy company Eni SpA , and in 1957 the Iranian parliament passed a law establishing the legal basis for the exploration, production, processing, transport and sale of Iranian oil was created outside of the production area awarded to the consortium. In the contract between the NIOC and Eni, which was concluded in the same year, a division of profits was stipulated, whereby the NIOC received 75% and the Eni 25% of the profits. In May 1957 Howard Page, the director of the then Standard Oil of New Jersey , had warned the NIOC against a contract with Mattei. However, the Shah stated that the NIOC should ignore such warnings. On August 1, 1957, Shah Mohammad Reza Pahlavi signed the said law and on August 3, 1957, the contract between the NIOC and Eni was signed.

Establishment of OPEC

Shah Mohammad Reza Pahlavi at the OPEC meeting in Tehran, 1970

On August 9, 1960, the consortium informed the Iranian government that it would lower the price for Iranian light oil by 12 cents and the price for heavy oil by 6 cents per barrel. The consortium reduced the price of Iranian oil from $ 2.04 to $ 1.78 per barrel. Shah Mohammad Reza Pahlavi stated in a speech given on Mordad 28 (August 19):

“Is it okay that the oil companies can raise or lower the price of oil at will without us, the owners of the oil, in the decision? In this case, as in all other cases, we will think of our legitimate rights and interests and take the necessary measures to protect our rights and interests. "

On August 28, 1960, the Shah announced at a press conference that an Iranian delegation would attend the meeting of the oil exporting countries in Baghdad. OPEC was founded on September 14th , with the Iranian delegation taking the lead in formulating the founding documents. It was only logical that the Iranian Fuad Rowhani became General Secretary in 1961.

It would take some time for OPEC to be recognized as a negotiating partner by the international oil companies. The representative of Iran at OPEC was Jamschid Amusegar in May 1965 . Between 1965 and 1975 he chaired numerous OPEC conferences at which historic decisions were made. At the OPEC conference in Tehran in 1970, for the first time, a price increase of 30% was resolved by the OPEC member states and implemented on the oil market. In addition, the taxation of the profits made by the oil companies in the producing country was set at a uniform 55% corporate income tax.

The 1973 Purchase and Sale Agreement

Press conference by Shah Mohammad Reza Pahlavi after the oil price increases, January 1971

The terms of the consortium agreement signed in 1954 had been very unfavorable for Iran. Shah Mohammad Reza Pahlavi was therefore looking for a way to end the contract that was valid until 1979 early and replace it with a new contract. A general clause in the contract stipulated that the consortium partners had to protect Iran's interests in the course of their business activities. Over the years the NIOC has warned the consortium partners that they violated the interests of Iran. The consortium partners did not invest any technology to intensify oil production; they simply flared off the gas produced during production, although it could have been liquefied or sold via gas pipelines; they refused to increase oil production despite requests from the Iranian government, arguing that increased Iranian oil production would be against their interests in the other producing countries; and they refused to renegotiate profit-sharing quotas, although they had meanwhile increased the profit-sharing in treaties with other countries significantly in favor of those countries. On January 23, 1973, Shah Mohammad Reza Pahlavi announced in a speech on the tenth anniversary of the White Revolution that he wanted to end the consortium agreement because the oil companies had broken it due to the lack of consideration for the interests of Iran. At the same time, he offered the consortium partners preferential treatment if they would agree to a new contract. The negotiations then led to a new treaty, which was signed in July 1973 and which would apply retrospectively from March 21, 1973 for the next twenty years.

The NIOC now took full control of all oil and gas activities in Iran. The former consortium partners were from now on only "buyers on preferential terms". The companies of the consortium, which had previously operated the exploration, production and processing of Iranian oil, were dissolved. An Oil Services company was founded by the consortium to provide the NIOC with the necessary technical services over the next five years. The budget and all activities of the Oil Services company required the approval of the NIOC. The NIOC only sold the quantities of oil to the consortium partners that it did not need for internal requirements or for export transactions with third parties. The minimum amount was set at 200,000 barrels per day, with the amount increasing to 1.5 million barrels over the years. From now on, all technical investments were in the hands of NIOC. The services of the Oil Services company were settled with a discount of 22 cents per barrel when purchasing the oil by the consortium partners.

Under the new conditions, exploration contracts with the oil discovery ended. The exploration costs were assumed by the companies at their own risk. After an oil discovery, the oil field was jointly developed by the NIOC and the exploration company. Once the exploration work was over, the NIOC took full control of the oil field. The exploration company only had the right to buy oil at a discount for fifteen years, the discount being based on the exploration costs.

With the newly negotiated Purchase and Sale Agreement, Shah Mohammad Reza Pahlavi had for the first time in Iran's history achieved full control over the exploitation of Iranian oil and gas reserves. In 1953, the oil facilities of the Anglo-Iranian Oil Company were nationalized. With the consortium agreement enforced by the international oil companies in 1954, control of production volumes, prices and investments remained with the foreign oil companies. Only with the purchase and sale agreement of 1973 could one speak of a nationalization of the Iranian oil business.

From 1975 onwards, the international oil companies brought more and more lawsuits about the terms of the purchase and sale agreement and demanded that the terms of the contract be renegotiated, since under the current conditions they would have lost too much income. Negotiations about a change got off to a slow start and were not concluded by the Islamic Revolution . The corporations received oil on new, improved terms only after the Shah left Iran.

Oil production today

NIOC extracts and supplies crude oil and natural gas. The company owns its own tankers, production facilities and oil platforms. In addition to its operational focus in Iran, the company is active worldwide. In the North Sea , NIOC has a 50 percent share in the British Rhum natural gas field .

Corporate investments

Web links

Commons : National Iranian Oil Company  - Collection of pictures, videos and audio files

Individual evidence

  1. ↑ Revealed: the 20 firms behind a third of all carbon emissions. The Guardian, accessed October 9, 2019 .
  2. ↑ Gholam Reza Afkhami: The life and the Times of the Shah. University of California Press, 2009, p. 198.
  3. ^ Oil and Economic Development of Iran. NIOC, 1968, p. 33.
  4. ↑ Gholam Reza Afkhami: The life and times of the Shah. University of California Press. Berkeley, 2009, pp. 263f.
  5. ↑ Gholam Reza Afkhami: The life and times of the Shah. University of California Press. Berkeley, 2009, pp. 266f.
  6. ↑ Gholam Reza Afkhami: The life and times of the Shah. University of California Press. Berkeley, 2009, p. 275.
  7. ↑ Gholam Reza Afkhami: The life and times of the Shah. University of California Press. Berkeley, 2009, p. 276.
  8. ↑ Iran-Daily ( Memento of July 10, 2007 in the Internet Archive )
  9. ↑ Iranian Fuel Conservation Organization ( Memento from August 25, 2007 in the Internet Archive )