Iraq Gives China Access to Oilfield

By Saibal Dasgupta

BEIJING: Iraq has agreed to give China access to one of its important oil fields opening up a rich source of oil to the energy hungry country.

The move will also prove to be an eye-opener to other energy short countries like India as it demonstrates China’s ability to use diplomacy and its general bias in favour of Islamic countries to obtain access to oil assets.

Iraqi oil minister Hussain al-Shahristani on Thursday signed an agreement with the Chinese government granting China exploration rights to the Al-Ahdab oil field in the province of Wassit, south of Baghdad. It is in effect the revival of a contract that was signed in 1997 and not operationalized due to UN sanctions.

China’s ambassador to Iraq, Chang Yi discussed the deal with Shahristani earlier this month. The deal was valued at $700 million 23 years back and might amount to several times more today. At that time, the planned oil production was then 90,000 barrels per day. The central government in Beijing is expected to ask the China National Petroleum Corp to handle the exploration rights.

At the end of June, the oil ministry threw open six oilfields and two gas fields for international bidding by 41 companies, the contracts for which are expected to be signed in June next year.

The move is part of Iraq’s larger efforts to raise oil output by 500,000 barrels per day, which is about the same amount pumped before the US-led invasion of Iraq in March 2003. The deals will make it possible for foreign oil companies to return to Iraq with new exploration rights.

It will be the first Saddam-era oil deal to be honored by the new Iraqi government. A number of firms say they signed deals with Saddam’s regime and demand that those be honored.

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