RE: Bp news17 May 2022 08:37
Iraq's government and officials at state-run firms are concerned that further consolidation of fields in the hands of Chinese companies could accelerate an exodus of Western oil companies, a total of seven Iraqi oil officials and executives with companies operating in Iraq told Reuters in interviews.
Supported by state-run oil company officials, Iraq's Oil Minister Ihsan Abdul Jabbar dissuaded Lukoil last year from selling a stake in one of the country's largest fields, West Qurna 2, to Chinese state firm Sinopec, three people familiar with the matter said.
Iraqi officials also intervened last year to stop Chinese state-backed firms buying Exxon's stake in West Qurna 1 and to persuade BP to stay in Iraq rather than offloading its interest in the giant Rumaila oilfield to a Chinese company, people familiar with the matter said.
Combined, Rumaila and West Qurna produce about half of the crude coming out of Iraq, which sits on the fifth-largest oil reserves in the world.
Iraq's oil ministry did not respond to requests for comment about the deals or the minister's role in any interventions.
The government worried that China's dominance could make Iraq less attractive for investment from elsewhere, two government officials said.
China's strengthening relationship with Iran has helped its position in Iraq due to Tehran's political and military influence there, but the oil ministry is wary of ceding more control over the country's key resources, some officials said.
"We don't want the Iraqi energy sector to be labelled as a China-led energy sector and this attitude is agreed by government and the oil ministry," another Iraqi official said.
RISKY STRATEGY
The interventions over BP, Exxon and Lukoil's positions in Iraq come after British oil major Shell decided in 2018 to withdraw from Iraq's vast Majnoon oilfield.
The interventions also mark a shift in stance after Chinese companies won most energy deals and contracts awarded over the past four years. Iraqi oil officials said Chinese firms have accepted lower profit margins than most rivals.
"All the rules regarding tenders were formulated jointly by the Chinese and Iraqi sides and were conducted under transparent and fair principles," said state-owned China National Offshore Oil Corporation (CNOOC) in an emailed statement.
Pushing back against further Chinese investment is a risky strategy, though, as there's no guarantee others will step up and the government needs billions of dollars to rebuild the economy after the Islamic State insurgency was defeated in 2017.
Over the past decade, oil revenue accounted for 99% of Iraq's exports, 85% of the country's budget and 42% of its gross domestic product, according to the World Bank.
While oil majors jostled to get access to Iraq's vast oilfields after the U.S.-led invasion in 2003, they are increasingly focused on the energy transition and more profitable plays elsewhere. They also want better terms to develop fields
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