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China’s Oil Quest is heading to Iraq

01 Dec 2012
While China’s oil dealings with countries like Sudan and Iran receive global attention, its promising relationship with Iraq can be really important. A huge attention has been paid in recent years to energy-hungry China’s billion-dollar bids on oil fields in Canada and the Asian giant’s reliance on oil from countries like Sudan and Iran to fuel its growing economy. But its rising interest in another chief oil producer has gone largely unnoticed, and if current trends continue, that Middle Eastern country could take the place of world’s next ‘superpower’, with china, not the West, acting as both Iraq’s main partner and top beneficiary of its rich supplies in that some now call the B&B trade axis (Beijing and Baghdad). In the past decade or so, China waited with patience on the sidelines while the U.S. and its allies coped with Iraq’s new, and often times messy internal dynamics that followed the 2003 conquer of Saddam Hussein by a U.S.-led alliance. China reemerged in 2008, however, to sign post-Saddam Iraq’s first major oil contract with a foreign country. While the majority of Iraqi oil contracts in the post-Saddam era were awarded to Western firms, the Western shift to a more agreeable and independent oil-rich Kurdish locality in the north amidst disenchantment with southern Iraq is creating vacuum that China has found hard to resist. Even more so than Russia, a conventional player in Iraq during the Soviet era, china has the capital that Baghdad is badly looking for building its oil and gas infrastructure, while Iraq has natural potentials that are alluring to a China that seeks to expand its energy sources. Already, Chinese oil companies have taken an active interest in obtaining contracts that had been awarded to western firms in 2009-2010, which the latter are now giving up so they can focus on alternative oil fields in Kurdistan. Although conversations between China and Iraq go back to at least 1997, main investments have only occurred in recent years, with Chinese National Petroleum Company (CNPC) concentrating on the 17 billion barrel Rumaila field – Iraq’s biggest – and Halfaya, both in the south. As of 2010, China had made five major oil investments in Iraq since the defeat of Saddam Hussein, one of which was in Kurdistan. Relations are already on the right foot now. In order to create a goodwill with Baghdad, Beijing in 2010 forgave about 80 percent of Iraq’s $8.5 billion debt to China and has signed multibillion-dollar trade deals in various sectors, including industry, tourism, government and transportation. As china is looking for expanding its fledging defense industry, it is not really unreasonable to think that at some point Iraq will turn to it for military hardware, which in turn would make incentives for greater military collaboration between the countries and further entrench China’s presence in Iraq. Source: [The Diplomat]
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