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China Awarded Major Contract By Iraq For Supergiant Oil And Gas Field

There are two key reasons why China, Russia, and the U.S. have long been scrambling to secure control over Iraq’s gas sector, and these are its massive potential size and its huge geopolitical importance. Last week’s awarding of the major build-own-operate-transfer contract to a subsidiary of Chinese flagship gas firm PetroChina to develop the Nahr bin Umar onshore gas field is a clear signal of how this competition is going. Even more so, as it follows the previous week’s takeover by PetroChina from the U.S. ExxonMobil of the lead operator role on Iraq’s supergiant West Qurna 1 oil field.

For China, Iraq’s gas sector is not just potentially massive but is also highly connected to its equally potentially huge oil sector, allowing the country to leverage contracts won in Iraq’s gas fields into a wider presence across its oil fields as well. The reason for this is that around 70 percent of Iraq’s gas reserves are ‘associated’ with oil fields, and the majority of these fields are located in the southeast of Iraq, in and around its major oil hub of Basra. The biggest of these associated gas reserves are to be found in the supergiant oil fields of West Qurna, Rumaila, Nassiriya, Majnoon, Halfaya, Zubair, and Nahr bin Umar. On the other hand, most non-associated gas reserves are to be found in the north of Iraq, especially in the semi-autonomous region of Kurdistan. As analysed in depth in my new book on the new global oil market order, China efforts to inveigle Iraq to sign up to the all-encompassing ‘Iraq-China Framework Agreement’ has in large part been aimed by Beijing at securing control over these southern oil fields, with their associated gas. This was done after China’s main geopolitical ally Russia secured control over Kurdistan’s entire oil sector in late 2017, gaining much control over its non-associated gas as well, as also detailed in full in the book.

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