• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 day Does Toyota Know Something That We Don’t?
  • 4 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 1 day World could get rid of Putin and Russia but nobody is bold enough
  • 4 hours America should go after China but it should be done in a wise way.
  • 4 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 3 days China is using Chinese Names of Cities on their Border with Russia.
  • 4 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 3 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 4 days Putin and Xi Bet on the Global South
  • 4 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 5 days United States LNG Exports Reach Third Place
  • 5 days Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 9 days huge-deposit-of-natural-hydrogen-gas-detected-deep-in-albanian-mine

Breaking News:

Chicago Files Suit Against Big Oil

Iraq Seals Much-Needed $2 Billion Oil Deal With China

Iraq has confirmed it has struck a deal with a Chinese company to supply it with crude oil and earn an advance payment of $2 billion.

Iraq's SOMO, the state oil marketing company, said the amount to be received will carry no interest and will represent a premium over oil prices, the Financial Times reported, citing the company's general manager.

While the company's name was not revealed, Argus reported in late December the winner was Zhenhua, a division of state-owned defense corporation Norinco. Norinco, the report noted, operates a 120,000-bpd refinery.

News of Iraq seeking a prepayment oil supply deal with buyers first emerged last November, as Baghdad struggled to keep the country functioning amid the oil price crunch and the OPEC-enforced oil production cuts. The deal was to be for a term of five years, until December 2025. Over this period, Zhenhua will get 48 million barrels of crude from SOMO annually, Argus reported.

"Prepaid oil cargoes are part of an urgent plan to boost state budget and overcome financial crisis. We have obligations towards OPEC to cut output, we have to repay foreign companies debts and also to keep our economy standing and this is why we need cash in advance for some of our oil sales," an official from the Iraq's oil ministry said at the time.

Oil revenues are vital for the Iraqi economy. According to the FT, as much as 90 percent of the state budget income comes from oil exports. The country is still struggling to get back on its feet after the war with Islamic State, too, which makes these revenues all the more vital.

For the Chinese company, the deal is good. It has locked in low oil prices just as global benchmarks are starting to go higher. For Iraq, the value of the agreement represents less than 4 percent of the expected oil revenues for this year, according to analysts.

By Irina Slav for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment
  • jone al sharon biriyani indian on January 05 2021 said:
    This deal is good for Iraq economy and much needed forex flow will boost spending.
    Iraq government has to create better infrastructure for il refining and electricity and this is now being imported. Iraq dinar devaluation will also boost oil revneues.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News