Iraq balks at greater Chinese control of its oilfields
By Sarah Mcfarlane and Aref Mohammed
Iraqi Oil Minister Ihsan Abdul Jabbar walks during a Lukoil energy event, in Baghdad, Iraq November 11, 2021. REUTERS/Thaier Al-Sudani
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LONDON/BASRA, May 17 (Reuters) - Iraq's oil ministry thwarted three prospective deals last year that would have handed Chinese firms more control over its oilfields and led to an exodus of international oil majors that Baghdad wants to invest in its creaking economy.
China is Iraq's top investor and Baghdad was the biggest beneficiary last year of Beijing's Belt and Road initiative, receiving $10.5 billion in financing for infrastructure projects including a power plant and an airport.
But when it comes to further Chinese investment in major oilfields, Baghdad has drawn a line in the sand.
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.
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.
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.
"Many of the energy majors are looking at the carbon emissions, their ability to generate cash flows if commodity prices are low, and they're looking at improving returns," said Ian Thom, research director at consultancy Wood Mackenzie.
"As the priorities of the energy companies are changing, the relative attractiveness of Iraq is changing."