Iraq doubles energy deals with China and Russia |
A phone call from US Secretary of State Antony Blinken to new Iraqi Prime Minister Mohammed Shiaa al-Sudani apparently did not resonate in Baghdad, with key agreements long planned between Iraq, China and Russia, regardless of the wishes of the United States.
The development comes as Iraq wants a revision of the production quota allocated to it by oil-producing group OPEC, the state news agency (INA) reported on Tuesday, quoting Sudani. This raises questions including: what is the reason for this requirement at a time when the OPEC+ alliance is sticking to production cuts? Is this step an attempt to appease Washington?
Observers say the Iran-aligned party-backed government is on the same path Tehran has chosen, betting on China and Russia, despite Sudani’s trade with Blinken, which showed Washington’s willingness to strengthen cooperation with the new government.
During the call, Blinken told the new Iraqi prime minister that Washington “looks forward to working with the government and people of Iraq to improve respect for human rights, increase economic opportunity, advance energy independence of Iraq and tackling the climate crisis”. The statement, however, failed to convince Sudani.
So far, Iraq’s new oil minister, Hayyan Abdul Ghani, has shown no sign of canceling the extraordinary “oil-for-projects” deal that was signed between Iraq and China in mid-2019. .
This agreement, in particular, opened the door for China to enter Iraq, which was the biggest beneficiary of China’s Belt and Road Initiative last year, receiving 10.5 billion dollars for infrastructure projects, including the construction of a power plant and an airport. .
Last week, local state-approved news agencies reported that Iraq’s Oil Exploration Company (OEC) and China National Offshore Oil Corporation (CNOOC) had begun several seismic surveys as part of the first phase of large-scale offshore oil and gas exploration between Iraq and China.
According to a separate statement from OEC Director Ali Jassim, CNOOC has begun work on a joint survey contract for two-dimensional seismic and geophysical surveys to explore hydrocarbon accumulations in Iraq’s offshore prospects in the northern Gulf.
In the middle of last month, China Petroleum Engineering & Construction Corp (CPECC) signed a $386 million engineering, procurement and construction contract to build a two-train oil processing facility in Quraynat to develop production in the southern part of the Rumaila field, the largest oil field in Iraq.
Observers say the close relationship between China and Iran has helped Beijing gain a foothold in Iraq due to Iranian political and military influence over ruling parties. It was also because of Tehran’s desire to reduce US military and economic influence in Iraq, where Tehran is pushing to rely on Russian companies.
“As for Russia, Iraq’s new oil minister also shows no sign of backtracking on his predecessor’s intention to allow Russian oil giant Lukoil to go ahead with exploration. and the development of the massive Eridu oil field, despite Russia’s invasion of Ukraine in February,” an independent said. Oil analyst and author Simon Watkins writes for Oilprice.com.
Despite past differences between the Iraqi government and the Russian company, which previously threatened to withdraw from the West Qurna 2 project, the new Iraqi government has made a decision allowing the Russian company to continue its explorations in the Eridu field.
The Sudanese government could find itself in a difficult situation if it sticks to betting on Chinese and Russian companies, which would understandably irritate the big Western companies, especially the American ones which exert a significant influence on the Iraqi oil industry. .
Sudani’s cabinet took office in late October, ending more than a year of stalemate since a parliamentary election. He was backed for the premiership by an alliance of Iran-aligned factions.