BAGHDAD: From the giant southern oilfields to the lively souqs of Basra, China is drilling ever deeper into Iraq.
Driven by an insatiable thirst for oil, Beijing secured a formidable position in Iraq’s prized energy sector through auctions held four years ago. It is now seeking to buy 850,000 barrels per day (bpd) of Iraqi oil, 30 percent of estimated 2014 exports.
Its dominant role in Iraqi oilfields sat uneasily with Baghdad at first. That changed when China’s quick, cost-effective ramp-up in production helped push Iraq up the OPEC ranks to second spot behind Saudi Arabia from a virtual standing start after the disruptions of the US-led invasion in 2003.
“The Chinese are our commercial partners in managing and developing oilfields that are totally Iraqi. So I don’t see any issue of dominance or threats,” said Thamir Ghadhban, chairman of the advisory commission to Iraq’s Council of Ministers.
“It’s the other way around. I think the Chinese find Iraq to be their favourite partner.”
Further expansion is in the works.
PetroChina’s anticipated purchase of a 25 percent share in Exxon Mobil’s West Qurna-1 oilfield project will allow China’s biggest energy firm to overtake Russia’s Lukoil to become the biggest single foreign investor in Iraqi oil.
“China’s strong position means the oil ministry has fewer qualms if Western companies back out because they are seen as being more readily replaceable,” said an Iraqi analyst.
PetroChina already partners with BP at Rumaila, Iraq’s largest producer, and operates the Halfaya and Al Ahdab fields. It was the first foreign firm to sign an oil service deal in Iraq after US-led forces toppled Saddam Hussein.
Deep pockets and corporate flexibility in the face of rising violence here in Iraq allows companies from China to offer the rapid production increases that many in the West cannot.
“The Chinese work cheaply and silently - worrying less about security compared to other foreign firms. They use a larger number of workers, so they always complete the job on time, if not before,” said an official with Iraq’s South Oil Co (SOC).
“When we advise other contractors, or even our own workers, on how to get the job done, we tell them, ‘Do it like the Chinese’.”
Baghdad has been particularly struck with PetroChina’s performance at Halfaya in the southern Maysan province.
Along with partners Total and Petronas, PetroChina has lifted flows from the field above 100,000 bpd, and output is expected to hit 200,000 bpd by next September.
PetroChina’s peers Sinopec and China National Offshore Oil Corp (CNOOC) are also on the ground, giving Beijing access to the whole of Iraq - from the autonomous Kurdish region in the north to the Maysan oilfield in the south.
Reuters
