Iraq’s oil between two options.. “Chinese dragon” in the arena and government ambition towards the West

Iraq’s oil between two options.. “Chinese dragon” in the arena and government ambition towards the West

2024-11-14 03:38

Shafaq News/ China no longer hides its desire to control the oil fields in Iraq, taking advantage of the withdrawal of Western companies from some fields, in addition to competing with several Chinese companies in the licensing rounds that Iraq announces from time to time, whether oil or gas, and trying to obtain the areas announced by the Ministry of Oil even if they return with small profits .

In return, Iraq is trying to keep European and American companies to develop its oil and gas fields, considering that these companies have extensive experience and advanced capabilities in the field of energy and are able to raise Iraq’s oil and gas capabilities.

Western companies “develop society”

Former Oil Minister Ihsan Abdul Jabbar told Shafaq News Agency: “The real investment that produces real value for the country, develops society and people, and raises the level of work ethics is what Western companies do.”

He added that “companies of other nationalities are good at work but do not meet all these requirements,” noting that “the ministry is trying to bring the best companies capable of creating a good social and work environment and implementing projects at the cheapest prices and with the highest return.”

Iraq seeks to attract investments, especially from American and European companies, in the associated gas sector in order to reduce gas flaring and boost production.

Self-sufficiency

In turn, the Undersecretary of the Ministry of Oil for Distribution Affairs, Hamid Younis, indicated during an interview with Shafak News Agency, that “the Ministry of Oil is working to encourage foreign companies to work in Iraq, and the current government is developing plans for investment and cooperation with international companies, and Iraq is keen to develop the gas sector and achieve progress.”

With the goal of achieving gas self-sufficiency within five years, Iraq is actively seeking to attract investment, with the United States encouraging American companies to enter the country’s energy sector.

High-level Iraqi delegations have visited the United States twice this year to meet with U.S. government officials and private sector companies, with the second visit resulting in several deals.

Younis points out that “permission has been granted to American and European companies to work with the Iraqi government, and the American government is also making plans to cooperate with local Iraqi companies.”

It is noteworthy that American interests in Iraq are dual. On one hand, they work to limit the growing Chinese influence in the Iraqi energy sector, and reduce Iraq’s dependence on electricity and gas imports from Iran.

As major Western companies pull out of Iraq’s energy sector, the country has turned east to achieve its goals of boosting crude oil and gas production capacity and reducing gas flaring.

For example, PetroChina took over the operation of the West Qurna 1 project after ExxonMobil exited in 2023, following the sale of its 22.7% stake to Iraq’s Basra Oil Company.

It is worth noting that China’s success in the Iraqi energy sector has been ongoing for a long time, and China is the largest buyer of Iraqi crude. During the first nine months of 2024, China imported 33.42% of Iraqi crude.

Chinese companies have proven their efficiency, which is equal to that of European companies, but the latter think about high profitability and low risk, while the Chinese do not care much about these two factors.

Competition

In this regard, oil expert Hamza Al-Jawahiri said in an interview with Shafak News Agency, “Chinese companies have a very high competitiveness with the rest of the international companies, and the licensing rounds are open to everyone, so when Chinese companies win contracts, they have the right to work in the fields they won with merit and transparency.”

He points out that “Iraqi laws do not allow companies, whether Chinese or otherwise, to dominate oil or gas fields in terms of their workers, as Iraqis must participate in these fields, and once the contract period ends, the companies withdraw from the fields they developed.”

Al-Jawahiri continues, “Chinese companies have won many of the licensing rounds announced by Iraq because they are not greedy like the Americans and Europeans, but rather they are satisfied with a small profit.”

Western companies’ sales of stakes in oil and gas fields have increased China’s control over Iraq’s oil sector. In the latest licensing round in May, major Chinese companies won 10 of 13 oil and gas projects, as did smaller Chinese companies, indicating a deeper entrenchment of Chinese companies in Iraq’s oil sector.

Work at lower costs

For his part, economic expert Hilal Al-Taan, in an interview with Shafaq News Agency, pointed out that “Chinese companies are large and rely on specialized consulting cadres. They have also deepened their relations with Iraqi local communities and employed many of them. They work under lower conditions and costs and with an efficiency that is no less good than their global counterparts.”

He added, “The major Western companies sold their shares after the decline in expectations of global demand growth, and Iraq’s decline in the targeted peak production, which was planned to reach nine million barrels per day, but the reality of the global market and export capabilities prevented reaching it. In addition, Iraq’s obligation for companies to reduce production to implement OPEC Plus requirements led to Western companies selling their shares to their Chinese counterparts.”

shafaq.com