Developing Iraq’s Oil Industry to Maximize Government Net Revenues

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Abstract/Contents

Abstract: This paper seeks to determine whether (1) nationalizing Iraq’s oil industry or (2) developing it through production-sharing agreements with international oil companies (IOCs) will generate the highest amount of net revenues for the Iraqi government. I propose to use the development of the Majnoon oil field in southern Iraq as a case study to answer this question. I consider a timeframe of forty years and construct the estimated revenues and costs associated with developing Majnoon under nationalization, comparing them to those associated with developing Majnoon under a PSA similar to that employed in Oman. I conclude that if the Iraqis believe that the Iraq National Oil Company (INOC) can be at least 87.5% as efficient as an IOC, then Majnoon would be more profitable under nationalization. If the INOC cannot be at least 75% as efficient, then Majnoon would be more profitable under a PSA. If the INOC’s relative efficiency is between 75%-87.5% (deemed the “Indecision Interval”), then Iraqi decision-makers must engage in further analysis to determine the profit-maximizing option. The case of Majnoon provides insights important for the decision-makers to consider when deciding on whether to nationalize Iraq’s oil industry or not.

Type of resource	text
Date created	June 2009

Author	Al-Moumen, Mohammad Mazin Hamid Ali
Primary advisor	Rothwell, Geoffrey
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	Iraq
Subject	oil
Subject	Majnoon
Subject	international oil company
Subject	Iraq National Oil Company
Genre	Thesis

Location	https://purl.stanford.edu/ms086jf4410

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Preferred Citation: Al-Moumen, Mohammad Mazin Hamid Ali. (2009). Developing Iraq’s Oil Industry to Maximize Government Net Revenues. Stanford Digital Repository. Available at: https://purl.stanford.edu/ms086jf4410

Stanford University, Department of Economics, Honors Theses

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