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. Last Updated: 07/27/2016

Iraqis Recall Bitter Oil History

DUBAI, United Arab Emirates -- They controlled Iraqi oil flows until Baghdad showed them the door 30 years ago. Now the Western multinationals are longing for a second shot at Iraq's vast oil fields when the country is free of United Nations sanctions.

Whether sanctions are removed by a U.S.-led war on Baghdad or UN weapons inspections, the world's top oil companies are hungry for access to Iraq's 112 billion barrels of reserves, second only to Saudi Arabia.

But bitter experience with Western majors has made Iraqi wary of foreign influence in its oil sector, the lifeblood of the national economy.

"Nobody will take Iraq for a ride again," a veteran Iraqi oil industry source said. "Do foreign oil companies expect to be given production-sharing contracts after their governments use aggression on us? We want to do things ourselves."

That strong sense of self-reliance already has inspired Iraqi officials to rebuild their industry from the ashes of the 1991 Gulf War while under 12 years of UN sanctions.

But Western oilmen hope to see a change in its go-it-alone mentality when and if the country opens up.

"We've always been up against a high degree of nationalism in Iraq. But reality must now be faced," a top Western oil executive said. "Iraq is on its knees and needs the international oil companies for their technology, cash and management."

Billions of dollars and Western technology are required just to boost capacity by 1 million barrels per day from its 3 million bpd mark.

Many Iraqis still bear a grudge after Western oil companies controlled their industry for half a century through the Iraq Petroleum Co.

From the time it struck oil at the huge Kirkuk field in 1927 until nationalism forced it out in 1972, IPC -- made up of BP, Exxon, Mobil, Shell, CFP and Partex -- ruled the roost.

But Baghdad felt cheated when IPC invested heavily in neighboring Iran and Saudi Arabia.

"BP and other companies felt Iraq was not a stable state where their investment would be protected in the long term," said Mustafa Alani, a London-based Iraqi analyst.

Fed up with what Baghdad saw as a lack of drive, Iraq revoked 99.5 percent of the IPC's territory in the early 1960s. IPC left the country pumping 1.7 million bpd in the early 1970s.

Less than a decade later, Iraq hiked capacity to 3.8 million bpd.

The last two decades, however, have seen war and sanctions battering its infrastructure and preventing development of many huge finds.

Mindful of its untapped wealth, Iraq under President Saddam Hussein has planned for the day it can reach 6 million bpd by drawing up a $20 billion development scheme that features 11 prime oil fields and assumes foreign involvement.

Iraq's game plan could change if sanctions are lifted or the United States succeeds in ousting Hussein.

But even the most open-minded, Western-leaning Iraqi technocrats are likely to drive a hard bargain.

"Iraqi oil officials do not see themselves as backward or disadvantaged and having to give away the store," said Amy Jaffe, president of AMJ Energy Consulting. "But if the government feels desperate for investment, terms would have to be commercial to get deals done quickly."