International Oil Companies and Petroleum Legal Policy in Iran [...]
| Author | Charlotte Joy Trudgill |
International Oil Companies and Petroleum Legal Policy in
Iran: Evolution in the Shadow of Resource Nationalism,
1951-1980
Charlotte Joy Trudgill*
This Article applies legal thought to a critical theory on resource
nationalism. The discussion is guided by the question: How did resource
nationalism (1951-1980) shape the legal landscape of oil production in
Iran? Adopting a historical approach, I explore how resource
nationalism shaped the legal policy for oil production, following a series
of political and economic changes from 1951 to 1980. The main
argument is that the political and economic changes that ensued from
resource nationalism affected the legal power of international oil
companies and the Iranian state, by shaping the legal framework that
governed oil production and ownership. During resource nationalism,
legislation is introduced to restrict foreign participation, and when
nationalisation recedes, different contractual regimes are used to re-
facilitate foreign interest. The discussion is organised under two
headings, ‘The International Consortium’ and ‘Resource Nationalism’.
An understanding of how the International Consortium achieved its
dominance is firstly established. This is followed by an exploration into
how resource nationalism influenced the legal structure of the oil
industry. Key legal changes fell under three phases of the Iranian
framework for petroleum: (1) the traditional concessions phase, (2) the
hybrid phase and (3) the general legislative framework. Throughout
these phases I examine how the rearrangement of power was achieved
through contracts and legislation. Finally, I apply the critical theory of
resource nationalism as a cyclical phenomenon, to explain the
fluctuating nature of state intervention and legal changes in this
context.
* Charlotte Joy Trudgill is a second year undergraduate in Law and Development Studies at
SOAS, University of London. She wishes to thank Ria Parmar and acknowledge Giulia Jacovella
for her guidance.
(2015) Vol. 2, Issue 2 Charlotte Joy Trudgill 129
SOAS LAW JOURNAL
I. INTRODUCTION
Resource nationalism created a structural change in power and ownership of
the oil industry. This Article explores how it has shaped the legal landscape of
oil production, analysing the phenomenon t hrough the evolution of contractual
regimes and legislation. As suggested in the title, the core discussion will focus
on Iranian oil production. This is because Iran is an example of a country that
has experienced almost all forms of prototypical contractual regimes in the
history of oil trade, 1 from traditional concessions to buy-back agreements.
Additionally, the advent of resource nationalism in 1951 was the first
government intervention of its kind in the Middle East, and despite its initial
failure, it sowed the seed for similar political developments throughout the
region. Resource nationalism itself is a phenomenon worth examining, not only
because it created an irreversible shift in patterns of investment and the
operation of the oil industry, but also because it affects the ability of a country
or region to mobilise its resources for development (in this sense, growth,
employment and poverty alleviation).2
An important consideration is the definition of resource nationalism. There is
no single meaning, let alone legal typology of resource nationalism. Thus, it is
useful to consider a number of interpretations of the term. The International
Energy Forum describes it as ‘nations wanting to make the most of their
endowment’, 3 by which producer countries create conditions ‘to maximize
revenue from present oil and gas production while altering the terms of
investment for future output’. 4 Another is the ‘increasing use of control of
natural resources to advance policy goals – both economic and foreign policy’.5
Paul Stevens 6 simply defines it as ‘limiting the operations of private
1 Nima Nasrollahi Shahri, ‘The Petroleum Legal Framework of Iran: History, Trends and the
Way Forward’ (2010) 8(1) China and Eurasia Forum Quarterly 111, 112.
2 Paul Stevens, ‘National Oil Companies and International Oil Companies in the Middle East:
Under the Shadow of Government and th e Resource Nationalism Cycle’ (2008) 1(1) Journal of
World Energy Law & Business 5.
3 The International Energy Forum, ‘Global Dialogue to Meet the Global Energy Challenge’ (IEF,
2007) ://www.ief.org/events/global-dialogue-to-meet-the-global-energy-challenge> accessed 5
August 2015.
4 Stevens, ‘National Oil Companies and International Oil Companies in the Middle East’ (n 2) 5.
5 Joseph Stanislaw, ‘Power Play: Resource Nationalism, the Global Scramble for Energy, and the
Need for Mutual Interdependence’ (Deloitte 2008).
6 Paul Stevens was educated as an economist and specialist in Middle East Studies at the
University of Cambridge and SOAS, University of London. Stevens is a distinguished expert in
the field of oil and energy research. A number of his works expound on the political economy of
the Middle East that pertain to n ationalisation in the region. See Paul Stevens, ‘Saudi Aramco:
The Jewel in the Crown’ in David G Victor, David R Hults and Mark C Thurber (eds), Oil and
Governance: State-Owned Enterprises and the World Energy Supply (CUP 2012).
To continue reading
Request your trial