Chinese companies have secured a significant number of contracts to explore oil and gas fields in Iraq, as revealed by Iraq’s Oil Minister during the ongoing hydrocarbon exploration licensing round, now in its second day. This event marks a pivotal moment for Iraq, aiming to increase its energy self-sufficiency and reduce reliance on imported resources.
In a strategic move, Chinese firms have emerged as the primary foreign beneficiaries in this licensing round, successfully acquiring exploration rights for ten oil and gas fields since the commencement of the round on Saturday. In addition to these, the Iraqi Kurdish company KAR Group has obtained licenses for two fields. The total licensing round encompasses 29 projects, primarily focused on boosting domestic production capabilities to meet local demand. More than 20 entities, encompassing a diverse group from European, Chinese, Arab, and Iraqi companies, had initially qualified to participate.
This sixth licensing round in Iraq is particularly significant as it targets an increase in natural gas output. The government plans to utilize the augmented gas production to power its electricity plants, which currently depend heavily on gas imports from Iran. However, the ambitions to bolster gas production faced a setback as no bids were received for at least six fields identified for their gas potential, which might impede the intended enhancement of domestic energy generation.
Interestingly, despite recent diplomatic engagements, including a meeting between Iraqi Prime Minister Mohammed Shia and representatives from U.S. companies during an official visit to the United States, no major American oil corporations have participated in this round. This absence is noted amidst a landscape where Iraq seeks to revitalize foreign interest and investment in its energy sector.
Delving into specifics, the awarding of contracts has seen significant participation from Chinese entities. CNOOC Iraq, a major player in the industry, successfully bid to develop Block 7, which spans several central and southern provinces including Diwaniya, Babil, Najaf, Wasit, and Muthanna. Additionally, other Chinese firms such as ZhenHua, Anton Oilfield Services, and Sinopec have been awarded contracts to develop various other fields. These include the Abu Khaymah field in Muthanna, the Dhufriya field in Wasit, and the Sumer field in Muthanna, respectively.
Furthermore, Geo-Jade, another Chinese company, has secured the rights to explore the Jabal Sanam oil field located in the Basra province. These developments underscore the growing influence and presence of Chinese enterprises in Iraq’s oil and gas sector.
Iraq, as OPEC’s second-largest oil producer after Saudi Arabia, has faced numerous challenges in developing its oil sector. The terms of contracts offered in the past have often been considered unattractive by many leading oil companies, which, coupled with ongoing military conflicts and an increasing focus on environmental, social, and governance (ESG) criteria by global investors, have hindered foreign investments.
The current licensing round is a critical part of Iraq’s strategy to enhance its energy independence and economic stability. By potentially increasing domestic oil and gas production, Iraq hopes to alleviate the economic pressures from energy imports, particularly natural gas. Moreover, the participation of a diverse array of international firms, despite the notable absence of American majors, indicates a continued interest in Iraq’s rich hydrocarbon resources, albeit shaped by the evolving dynamics of global energy markets and geopolitical considerations.
