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The Iraqi government prevented three deals that would have seen greater Chinese ownership in its oil fields, Reuters has reported, adding that should that have happened, international companies would have left the country.
Two of these deals involved Russia's Lukoil and Exxon, which were both in talks with Chinese buyers of a couple of the biggest producing fields in Iran—West Qurna 2, which Lukoil operates, and West Qurna 1, where Exxon is the operator. Both deals fell through after the Iraqi government intervened, the report notes, citing unnamed sources.
The third deal involved BP and its plans to sell its stake in the giant Rumaila field. According to the Reuters sources, the Iraqi government managed to persuade the supermajor to remain operator of Rumaila.
It seems that Baghdad is worried that greater Chinese ownership in its oil industry would push Western oil companies out, even though China is already the largest investor in Iraq. The Belt and Road initiative last year poured some $10.5 billion into the Iraqi economy, making it the biggest beneficiary of the infrastructure investment program.
The Iraqi oil minister sounded the alarm on the potential exit of international oil companies last July when he announced that BP and Lukoil had plans to sell assets there.
"The existing investment environment in Iraq is inappropriate to keep the major investors," Ihsan Abdul Jabbar said at the time. "All major investors are either looking for another market or for another partner. We, as an investment environment, are inappropriate for major partners."
Since then, it appears that the government has made an effort to convince the majors to remain in the country, which still struggles with social unrest and grave economic problems. It seems determined, however, to not let Chinese companies become dominant.
"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," one of the Reuters sources told the news agency.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com