Foreign investment and oil industry in the Persian Gulf states

Abstract

In spite of abundant proven reserves and huge production capabilities, the Persian Gulf states have attracted little foreign investment in their oil industry. Indeed, the government still dominates the energy sector in the whole region. Since the mid 1990s, however, several Gulf states have taken steps to liberalize the ownership and management of their hydrocarbon resources. This study examines the current efforts (real and potential) in four Gulf states (Iran, Iraq, Kuwait and Saudi Arabia) to invite international companies back to their upstream oil sector. The paper argues that economic and strategic considerations are the main reasons behind this hesitant and slow opening. While Iran and Kuwait have taken the lead, Saudi Arabia is still reluctant and Iraq is waiting for the lifting of the international sanctions.