Oil Nationalization

Extracted Attributes

• Definition

  Process of confiscation of oil production operations and their property by governments

• Key Outcome

  Redirection of revenues to the country’s government instead of private operators

• Primary Purpose

  Obtaining more revenue from oil for the governments of oil-producing countries

• Impact on Ownership

  Eliminates private business operations and transfers control to state ownership

• Risk for Foreign Companies

  Potential for significant assets seized without compensation, especially in politically unstable countries

• Global Reserve Control (PFC Energy)

  Approximately 65% of reserves are in the hands of state-owned companies

• Challenge for National Oil Companies

  Balancing national expectations ('carry the flag') with commercial success

Timeline

• Mexican President Lázaro Cárdenas signed an order expropriating the assets of nearly all foreign oil companies operating in Mexico, leading to the creation of PEMEX. (Source: web_search_results)

  1938-03-18

• Legislation for the nationalization of the Iranian oil industry was passed by the Iranian parliament (Majlis). (Source: web_search_results)

  1951-03-15

• The legislation for the nationalization of the Iranian oil industry was verified by the Majlis, leading to the nationalization of the Anglo-Iranian Oil Company (AIOC) and formation of the National Iranian Oil Company. (Source: web_search_results)

  1951-03-17

• The Iranian military, with British and U.S. intelligence support, overthrew Prime Minister Mohammad Mossadeq, who had nationalized the country’s oil industry two years prior. (Source: web_search_results)

  1953-08

• Following a British embargo, the Iranian government agreed to a consortium of mainly U.S. companies to bring Iranian oil back online, while the oil remained nationalized. (Source: web_search_results)

  1954-10

• OPEC moved to rebalance profit sharing and oil prices, refusing to allow foreign oil companies to deal with the organization as a whole and forcing separate negotiations, marking a turning point for OPEC's clout. (Source: web_search_results)

  1971-04

• Oil nationalization policies were implemented in Venezuela under Hugo Chávez, centralizing state control over oil resources. (Source: related_documents)

  Unknown

• Oil nationalization policies in Venezuela were intensified by Hugo Chávez's successor, Nicolás Maduro. (Source: related_documents)

  Unknown

Nationalization of oil supplies

The nationalization of oil supplies refers to the process of confiscation of oil production operations and their property, generally for the purpose of obtaining more revenue from oil for the governments of oil-producing countries. This process, which should not be confused with restrictions on crude oil exports, represents a significant turning point in the development of oil policy. Nationalization eliminates private business operations—in which private international companies control oil resources within oil-producing countries—and transfers them to the ownership of the governments of those countries. Once these countries become the sole owners of these resources, they have to decide how to maximize the net present value of their known stock of oil in the ground. Several key implications can be observed as a result of oil nationalization. "On the home front, national oil companies are often torn between national expectations that they should 'carry the flag' and their own ambitions for commercial success, which might mean a degree of emancipation from the confines of a national agenda." According to consulting firm PFC Energy, only 7% of the world's estimated oil and gas reserves are in countries that allow private international companies free rein. Roughly 65% are in the hands of state-owned companies such as Saudi Aramco, with the rest in countries such as Russia and Venezuela, where access by Western companies is difficult. The PFC study implies political groups unfavorable to capitalism in some countries tend to limit oil production increases in Mexico, Venezuela, Iran, Iraq, Kuwait and Russia. Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the other countries.

Web Search Results

• Nationalization of oil supplies - Wikipedia

  The nationalization of oil supplies refers to the process of confiscation of oil production operations and their property, generally for the purpose of obtaining more revenue from oil for the governments of oil-producing countries. This process, which should not be confused with restrictions on crude oil exports, represents a significant turning point in the development of oil policy. Nationalization eliminates private business operations—in which private international companies control oil [...] Due to the overall instability of supply, oil became an instrument of foreign policy for oil-exporting countries. Nationalization increased the stability in the oil markets and broke the vertical integration within the system. Vertical integration was replaced with a dual system where OPEC countries controlled upstream activities such as the production and marketing of crude oil while oil companies controlled downstream activities such as transportation, refining, distribution, and sale of oil [...] Several key implications can be observed as a result of oil nationalization. "On the home front, national oil companies are often torn between national expectations that they should 'carry the flag' and their own ambitions for commercial success, which might mean a degree of emancipation from the confines of a national agenda."

• Nationalization of the Iranian oil industry - Wikipedia

  The nationalization of the Iranian oil industry (Persian: نهضت ملی شدن صنعت نفت ایران) resulted from a movement in the Iranian parliament (Majlis) to seize control of Iran's oil industry, which had been run by private companies, largely controlled by foreign interests. The legislation was passed on March 15, 1951, and was verified by the Majlis on March 17, 1951. The legislation led to the nationalization of the Anglo-Iranian Oil Company (AIOC) and the formation of the National Iranian Oil [...] scientist Mark J. Gasiorowski, the oil nationalization movement had two major results: the establishment of a democratic government and the pursuit of Iranian national sovereignty. [...] ## Background [edit] From the time of the discovery of oil in Iran, foreign powers used force and exploited the weakness of the Iranian state to coerce it into concessions which allowed foreign companies to control oil extraction. The nationalization of the oil industry was the response to these foreign interventions. Particularly the following concessions:

• Nationalization: Definition and How It Works in the Oil Industry

  The oil industry has experienced nationalization actions for decades, dating back to Mexico’s nationalization of the assets of foreign producers such as Royal Dutch and Standard Oil in 1938 and Iran's nationalization of the assets of Anglo-Iranian 1951. The result of Mexico's nationalization of foreigners’ oil assets was the creation of PEMEX, which is one of the largest oil producers in the world.2 After the nationalization of Anglo-Iranian, Iran's economy fell into disarray, and Britain was [...] Nationalization is one of the primary risks for companies doing business in foreign countries due to the potential of having significant assets seized without compensation. This risk is magnified in countries with unstable political leadership and stagnant or contracting economies. The key outcome of nationalization is the redirection of revenues to the country’s government instead of private operators who may export funds with no benefit to the host country. ## Nationalization and Oil [...] Nationalization is the process of taking privately-controlled companies, industries, or assets and putting them under the control of the government. Nationalization often happens in developing countries and can reflect a nation's desire to control assets or to assert its dominance over foreign-owned industries. Often, the companies or assets are taken over and little to no compensation is provided to the previous owners.

• Timeline: Oil Dependence and U.S. Foreign Policy

  the Mexican government nationalizestheoilindustry and revokes U.S. oil concessions. The U.S. government does not retaliate, in part due to fears Mexico will align with Germany in World War II. Mexico’s actions foreshadow a wave of oil nationalizations that will follow in the decades after the war. [...] In April 1971, OPEC moves to rebalance profit sharing and oil prices and refuses to allow foreign oil companies to deal with the organization as a whole. The bloc instead forces them into separate negotiations, one for Persian Gulf producers (Tehran Agreement) and one for producers on the Mediterranean (Tripoli Agreement), resulting in higher prices. The incident marks a turning point for OPEC’s clout. Within a decade, many of OPEC’s members begin to partially or fully nationalize their oil [...] In August 1953, the Iranian military, with the helpofBritishandU.S.intelligence agencies, overthrows Iranian Prime Minister Mohammad Mossadeq—who nationalized the country’s oil industry two years earlier. The U.S. government works with U.S. oil majors and the Iranian government—now run by the Shah—to bring Iranian oil back online following a British embargo of oil shipments. Iran’s oil remains nationalized, but in October 1954 the government agrees to a consortium of mainly U.S. companies to

• Mexican Expropriation of Foreign Oil, 1938 - Office of the Historian

  On March 18, 1938, Mexican President Lázaro Cárdenas signed an order that expropriated the assets of nearly all of the foreign oil companies operating in Mexico. He later created Petróleos Mexicanos (PEMEX), a state-owned firm that held a monopoly over the Mexican oil industry, and barred all foreign oil companies from operating in Mexico. The U.S. Government responded with a policy that backed efforts by American companies to obtain payment for their expropriated properties but supported [...] and domestic oil production dropped due to the Great Depression and a glut in the global oil supply. These developments, combined with the fact that the large oil companies often paid their Mexican workers only half as much as other employees working in the same capacity, ultimately led to massive labor unrest. [...] could be formulated in Washington. Further opposition from the Treasury Department eventually forced Hull and the State Department to back down.