China becomes the first to allowed into Iraq oil fields

BEIJING: Energy hungry China has finally got its hands into oil assets in Iraq, which has remained off-limits to foreigners since Saddam Hussein nationalised the industry in 1972. The state-run China National Petroleum Corporation has become the first foreign company to start work in an Iraqi oil field after a gap of 30 years.

CNPC has launched work on a $3 billion old field development project at the Al-Ahdab oilfield in Iraq's eastern province of Wasit. This is really a revival of an old project that was negotiated when Saddam still ruled the country. But his government later shelved the project when nationalisation kicked in.

The present government in Iraq recently renegotiated the deal and offered CNPC a service contract last November. Under the agreement, Iraq's state companies will keep all the oil while paying the foreign companies for their work, rather than sharing output with foreign partners.

Though the Chinese firm will not get a direct share out of the oil produced at this field, analyst regard it as a good deal because it will help China build relationship with Iraqi officials on the government and take forward Beijing's endless quest for oil.

Analyst says Iraq's decision to choose a Chinese firm as the first foreign company to be allowed into its oilfields is significant. It is seen by some as a sign that China's overall diplomacy favouring Muslim nations in international affairs, even when it comes to taking a stand against the United States, has paid off in terms of business.

Reports from Bagdad quoted Wasit governor Latif al-Tarfa describing the deal as "a significant event which signals the first contribution of a foreign company in developing Iraq's oilfields for three decades".

The Chinese delegation has been received and feted by Iraqi ministers. "The company is there at the site and has already taken the first steps," Wasit was quoted as saying.

CNPC said Al-Ahdab, which covers 200 square kilometres, is expected to reach 25,000 barrels per day within three years and 115,000 barrels per day within six years. The Chinese company has inked a 23-year contract.

Iraq, which has the world's third largest reserves of oil, is a magnet for oil companies desperate for a piece of action.

(The Times of India)