recent years I corroborated by an excerpt from what Senator Muskie referred to as "this intelligence report," which he read into the record of the Senate Subcommittee on Multinational Corporations on March 28, 1974. According to the Senator, the report was "dated February 1967 and it has to do with this question of the potential in Iraq."
In 1966 a study was made of the geological, geographical and other petroleum exploration data of the areas of Iraq relinquished by IPC, Iraq Petroleum Co. The purpose of the study was to help government let new concessions and obtain more advantageous terms from foreign oil firms. The study indicated that the untapped reservoirs of oil in Iraq appear to be fantastic.
There is every evidence that millions of barrels of oil will be found in the new concessions. Some of those new vast oil reservoirs had been discovered previously by IPC but they were not exploited because of the distance to available transportations, the heavy expense of building new pipelines and the fact that IPC has had a surplus of oil in its fields that are already served by existing pipelines.
The files yielded proof that IPC had drilled and found wildcat wells that would have produced 50,000 barrels of oil per day. The firm plugged these wells and did not classify them at all because the availability of such information would have made the companies' bargaining positions with Iraq more troublesome. Many of these areas had been returned to the Government in settlement of the petroleum concession conflict between the Government and IPC.
Public Law 80
Word of IPC's restrictive practices could not be kept from the Iraqis indefinitely. The first concrete manifestations of their mounting happiness was the enactment in 1961 of Public Law 80, withdrawing IPC's rights to those areas in which it was not producing. The nature of the action was described in an internal State Department memorandum dated October 13, 1967, from Assistant Secretary Solomon to Under Secretary Katzenbach: "The Iraqisâ€¦â€¦.in December, 1961, took away over 99.5 percent could be returned to the company. All subsequent discussions have shattered on the selection of this crucial 0.5 percent – the company insisting that it include North Rumaila and the government insisting that if not."
In response to a request from the Under Secretary, Andreas Lowenfeld of the State Department's legal office submitted a memorandum on "the validity and effect of Law No. 80 of December 11, 1961." Emphasizing the differences between the Iraqi action and "typical nationalizations, such as have recently occurred for example in Cuba or Indonesia," Lowenfeld pointed out: "Under Law No. 80, IPC's property as such has not been taken, and in fact IPC's operations have continued substantially unimpeded. What IPC has been deprived of is mineral rights granted in a number of concessions awarded by the government of Iraq. Thus, it may be argued that IPC's claim is at most a claim for breach of contract, and not a claim arising out of expropriation of property." None of the area expropriated, the memorandum stressed, was actually under production: "For the most part the area removed from the concession was unexplored territory, but the area included in several cases proven reserves. Our understanding is that IPC's production capacity (at least in the short-run) was not affected by Law No. 80â€¦.. The question of whether and under what circumstances the breach of a concession gives rise to a violation of international law is very much in doubt." If the matter were brought before some international body for adjudication, Lowenfeld warned, IPC on at least one point would be "fairly vulnerable," i.e., that the company had not governed its exploitation of Iraq's oil "solely according to the requirements of Iraq and the intention of the concession, but in accordance with the overall interests of the participating companies."
This issue could be raised with respect to the amount of exploration and production in Iraq; with respect to pricing and discounting policies followed by the company; a