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Volume :1 Issue : 2 1975      Add To Cart                                                                    Download

NATIONALIZATION OF OIL: PROS AND CONS

Auther : Mohammed Nassir

 
         The author, a Professor of Petroleum Economics at Kuwait University, surveys, analyzes and compares the theses of major Arab opponents and proponents of oil nationalization, particularly during the sixties. He presents a critique of both cases and then suggests a model of his own.

         In analyzing the case against nationalization, the author discusses the thesis of Ashraf Lutfi, former Secretary General of OPEC, as well as that of Dr. Abdul Hadi Hasan Taher, the head of Saudi Arabia’s delegation to the Sixth Arab Petroleum Congress, held in Baghdad in March 1967. Dr. Taher favored participation agreements as against immediate nationalization, arguing that it was very difficult to market nationalized oil and that there would be major problems in case of nationalization in the fields of prices, competitiveness and capital requirements.

         The case for nationalization, favored during the sixties by Sheikh Abdallah al-Tariki, the former Saudi Arabian Oil Minister, was based on the following propositions:

1.    Nationalization is the best and surest way of achieving real rather that mere formal economic and political independence;

2.    Nationalization is neither risky nor costly to the oil producing states;

3.    Nationalization is a necessary step to increase much needed oil revenues for the purpose of rapid economic development; and,

4.    Nationalization produces other side-effects such as experience and know-how, increase in employment, etc……

         Finally, the author elaborates on both cases and concludes that both advocates and opponents of nationalization have a sound case, although their findings and conclusions are completely opposite to each other.

 

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