Iraq should pay war reparations to Iran from joint oil field profits

January 10, 2010

TEHRAN - Former deputy oil minister Mohammad Nejad-Hosseinian says Iran should develop the oil fields it shares with Iraq as a way to obtain reparations for the damage inflicted on Iran by Saddam Hussein’s Baathist regime during the 1980-1988 Iran-Iraq war.

In three to four years, when Iraq starts producing oil from these joint oil fields, its oil production will increase by 1.5 million barrels per day, and the migration of Iran’s oil to Iraq would be a great loss for the Islamic Republic, he added.
Nejad-Hosseinian, who is currently the secretary general of the Asian Parliamentary Assembly, made the remarks in an interview with the Tehran Times and the Mehr News Agency conducted on Wednesday.
Following is the text of the interview with Nejad-Hosseinian:
Q: After Iraq awarded development contracts to a number of international companies for the development of its oil fields, you warned Iranian officials about the possibility that Iranian oil from the joint oil fields will migrate to Iraq. How many joint oil fields are there and is there an estimate of the amount of oil reserves in those fields?
A: So far around 20 oil and gas fields have been identified on the borders of Iran and Iraq, and most of those fields are joint fields between the two countries. There is no precise estimate of the amount of oil reserves in those fields but they are certainly among Iran’s largest.
Q: What measures should Iranian officials take to prevent the migration of Iranian oil from the joint oil fields to Iraq?
A: I think it is necessary for both countries to start operating the joint oil fields simultaneously. But even this measure will not resolve the issue entirely.
When there is more than one operator for a joint oil field, each one attempts to produce the maximum amount of oil and gas within its own geographical scope in the shortest possible period. Under such circumstances, the main focus is on maximizing production while less attention is paid to properly maintaining the oil field and optimizing production.
Such a policy would damage the entire field, to the detriment of the interests of both countries.
Q: What should be done to prevent such a situation and to prevent the migration of Iranian oil to Iraq?
A: Well, the option that seems most feasible is the joint development of such fields. In other words, the development and exploitation of the field should be done through an integrated system. This means that a contractor is put in charge of development of the entire joint field while optimal exploitation of the joint oil field is carried out by a joint organization. Finally, the income accrued should be paid to each party.
Q: Do you really think the idea is practical?
A: Iranian officials should negotiate with their Iraqi counterparts in order to convince them that this policy is in (both countries’) best interests.
I think Baghdad should be reminded of the fact that it is not possible that the current situation will continue. The Tehran-Baghdad disputes on the range of the joint oil fields and the related border disputes could endanger the security of the region.
Iraq knows that security is the main prerequisite for the operations of foreign companies.
Security concerns would deter most foreign contractors from operating in a risky environment. In my opinion, if Tehran and Baghdad could reach an agreement in that regard, Iraq could ask any winning bidder to extend its operations to the entire joint field. Any extra costs borne by the operating contractor should be paid by Iraq as part of the war reparations for the Iran-Iraq war.
After the commencement of the operation of the joint fields, the outstanding reparations for the war should be paid in proportion to the amount of oil production.
Q: But Iraq has not accepted the fact that it is liable to pay reparations to Iran.
A: The issue of war reparations is one of the important issues in Tehran-Baghdad relations that seems to have been forgotten for no specific reason. Based on international law, Iraq is obligated to compensate Iran for war damages incurred during Saddam’s war against Iran.
Some officials who were opposed to Saddam currently hold various posts, from the presidency to the lower ranks. When Saddam was in power, these people visited Iran and repeatedly condemned Iraq’s invasion of Iran.
There is also ample evidence and documents to condemn Iraq’s invasion of Iran. If the Iranian government fails to seek reparations for the war now, then it will have far less success in achieving anything in the future.
Thus, I think the time is ripe for convincing the Iraqis to agree to a deal to adopt the policy of integrated development of such oil fields jointly for ensuring the maintenance of the fields. This policy… will serve to enhance the security of the borders on the one hand and on the other hand will help Iraq compensate Iran for the war damages.
Q: How can this idea be actualized?
A: As I mentioned, it is not too difficult to implement. If Tehran and Baghdad reach an agreement in that regard, Iraq could ask those who won the bids for the oil fields to extend the area of their operations to the entire joint oil and gas field. Iran’s share in the joint oil field development would be paid as part of the reparations for the war damages.
With the start of operations in the oil field, a percentage of the oil produced should be delivered to Iran for the outstanding war reparations in addition to Iran’s legal share in the partnership.
Q: Iranian President Mahmoud Ahmadinejad recently issued an order calling for an estimate to be made of the amount of damages Allied Forces inflicted on Iran in World War II. Shouldn’t seeking war reparations from Iraq be more of a priority now?
A: I think it is a priority since there was an estimated amount of damage inflicted on Iran during the war. Moreover, Iraq is blessed with an abundance of God-given natural resources. Therefore, compensating Iran for the war should not be that much of a problem for the country’s economy. Thus, I hope that seeking war reparations from Iraq will be placed on the agenda of Iranian officials.