Chinese firms win bids to explore Iraqi oil and gas fields

Baghdad — Chinese companies have won bids to explore five Iraqi oil and gas fields for hydrocarbon exploration that was primarily aimed at ramping up gas production for domestic use.

An Iraqi Kurdish company also took two of the 29 projects up for grabs in the three-day licencing round across central, southern and western Iraq, which for the first time includes an offshore exploration block in the country’s Arab Gulf waters.

Iraq aims to lure billions of dollars of investments to develop its oil and gas sector as it looks to ramp up local petrochemicals production and end imports of gas from neighbouring Iran that are now key to producing power.

More than 20 companies pre-qualified for the licencing round, including European, Chinese, Arab and Iraqi groups. There were notably no US oil majors involved, even after Iraqi Prime Minister Mohammed Shia met representatives of US oil firms during an official visit to the US last month.

Five bids were won by Chinese companies.

Zhongman Petroleum and Natural Gas Group (ZPEC) took the northern extension of the Eastern Baghdad field, in Baghdad, and the Middle Euphrates field that straddles the southern Najaf and Karbala provinces, the oil ministry said.

China’s United Energy won a bid to develop the Al-Faw field in southern Basra, while ZhenHua won a bid to develop Iraq’s Qurnain field in the Iraqi-Saudi border region and Geo-Jade won a bid to develop Iraq’s Zurbatiya field in the Wasit.

Two oil and gas fields were taken by Iraq’s KAR Group — the Dimah field in eastern Maysan province, and the Sasan & Alan fields in Iraq’s northwestern Nineveh province — the ministry said.

Falah Al-amri, the Iraqi prime minister’s adviser for oil and gas issues, said the government hoped the new projects would raise oil production to 6-million barrels a day by 2030 from about 5-million now.

The government also wants the projects to produce enough natural gas so that, along with plans to all but eliminate gas flaring by 2030, Iraq could end imports.

“It's too early to talk about gas exports. We want to get self-sufficient,” Al-amri said,

Iraq, oil cartel Opec’s second-largest oil producer after Saudi Arabia, at one time had targeted becoming a rival to the Gulf Arab kingdom with output of over a tenth of global demand. But its oil sector development has been hampered by contract terms viewed as unfavourable by many major oil companies, as well as recurring conflict and political paralysis.

Growing investor focus in recent years on environmental, social and governance criteria have also had an effect.

Western oil giants such as ExxonMobil and Royal Dutch Shell have departed from a number of projects in Iraq, while Chinese companies have steadily expanded their footprint.

Reuters