• 5 mins UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 4 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 6 hours German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 7 hours Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 9 hours Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 1 day Oil Prices Rise After API Reports Major Crude Draw
  • 1 day Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 1 day Gazprom Speaks Out Against OPEC Production Cut Extension
  • 1 day Statoil Looks To Lighter Oil To Boost Profitability
  • 1 day Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 1 day Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 1 day Whitefish Energy Suspends Work In Puerto Rico
  • 1 day U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 7 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
Alt Text

Trump Just Made Iran A Wildcard

The impact of Trump’s decision…

Alt Text

Kurdistan Accuses Baghdad Of Planning Oil Field Seizure

Kurdistan authorities have accused the…

Chinese Oil Companies Apparent Victors in Post-Saddam Iraq

Chinese Oil Companies Apparent Victors in Post-Saddam Iraq

It was not supposed to be like this.

After 2003’s U.S.-led Operation Iraqi Freedom, Iraq’s vast oil reserves, a monopoly under the Baathist government of deposed President Saddam Hussein, were opened to foreign investment.

That optimistic assessment proved somewhat naïve however, as the country quickly descended into a prolonged power struggle between Sunni Arabs, who had dominated the Saddam administration, Shia Iraqis, the majority in the country, and northern Iraq’s Kurdish population, which had suffered years of repression.

Nevertheless, a political calm ultimately prevailed to the point where foreign oil companies could tentatively begin to explore and develop Iraq’s vast hydrocarbon riches, the U.S. Energy Information Administration reporting, “Iraq was the world’s 12th largest oil producer in 2009, and has the world’s fourth largest proven petroleum reserves after Saudi Arabia, Canada, and Iran. Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where vast reserves, proven and unknown, have barely been exploited.”

The problem for foreign oil companies was who to deal with in the chaotic post-Saddam Iraqi political miasma? The alienated Sunnis, the increasingly dominant Shia, or the northern Kurds, who had their own quiet agenda of both carving out increased political autonomy from Baghdad while enticing foreign investment.

Related Article: The Coming Oil War in Iraq

Now, a major U.S. corporation after winning a massive contract in 2009 in southern Iraq from Baghdad, has decided to divest itself of its investment, there, preferring to develop Kurdish oil fields. And the major foreign contender for ExxonMobil’s Qurna-I concessions is – China.

West Qurna is one of Iraq's largest oil fields, located north of Rumaila field, west of Basra, and estimated to contain 43 billion barrels of recoverable reserves, making it potentially the world’s second largest “superfield” after Saudi Arabia's giant Ghawar oil field. In November 2009, an Exxon Mobil - Shell joint venture won a $50 billion contract to develop the estimated 9 billion barrel West Qurna Phase I, with Iraq’s Oil Ministry estimating that developing the site would require an initial $25 billion investment.

It now appears that China National Petroleum Corp. may acquire West Qurna-1 oilfield from Exxon Mobil. Iraqi and Chinese sources said that CNPC unit Petrochina is currently in negotiations for Exxon's 60 percent in the West Qurna-1 project. Speaking on condition of anonymity, a senior Iraqi official knowledgeable of the discussions said, "CNPC has shown interest; they are there. And from our side, there is no problem with them taking on a bigger position. We are not sensitive about this."

Related Article: Iran Asks OPEC to Cut Output so Countries can't Find Alternative Sources of Oil

Unlike the western interests increasingly focused on Iraq’s Kurdish regions, where oil must be sent via pipelines through Turkey, a major advantage for China of Qurna-1 is that the superfield’s crude could be sent out by sea from Iraq’s Persian Gulf Basra port.

Adding to China’s advantage in the bidding war for Qurna is the fact that the country’s search for energy resources worldwide already make China a major buyer of Iraqi crude. Furthermore, as access to global oil reserves is a high strategic priority for Beijing, China is willing to negotiate more severe terms and lower profits than Western oil majors and even Russia’s Lukoil in the interest of long term access. This will play well in Baghdad, as it confirms its sovereignty over the nation’s hydrocarbon reserves, even as ExxonMobil attempts to bypass the central government by cutting deals directly with the Kurdish Regional Government.

China’s offer of both financial largesse and political support is music to the regime of Iraqi Prime Minister Nuri al-Maliki’s government in Baghdad, given that Iraq has the world's fourth-largest oil reserves and wants to at least double its production in the next few years and ultimately challenge Russia and Saudi Arabia as the world's biggest oil nation.
Looking at the view from inside the Beltway, ExxonMobil's departure from Qurna-1 would decimate America’s presence in Iraq's southern Shia oilfields – which will cause interested DC pundits to wonder – is this why America went to war in 2003, to overthrow Saddam to make the country safe for Chinese oil companies?

Perhaps Michael Corleone summed it up best – “its just business” – and ExxonMobil is not the U.S. government.

By. John C.K. Daly of Oilprice.com

Back to homepage

Leave a comment
  • Collin on December 28 2012 said:
    After Afghanistan and Iraq, I am coming to believe controling of Middle East is sort like trading for Stephen Marbury. He has the potential to be Hall Of Famer basketball player but every team that trades for him wins less. I say let the Chinese oil companies have Iraq oil and Afghanistan minerals. Either one of two things will happen. One, everybody profits and Middle East countries develop. Or Two, when the profits end, armed conflict starts.

    Long term that is not a bad deal.
  • don c on December 30 2012 said:
    ok, the usa taxpayer paid for the war......so the next court of law that gives the oil to someone else.....should be asked to get out of the usa

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News