China's expertise secures lead role in Iraqi oilfields
Companies led by PetroChina have won favour in Baghdad for quick ramp-ups in production
From the giant southern oilfields to the lively souks of Basra, China is drilling ever deeper into Iraq.
Beijing secured a formidable position in Iraq's prized energy sector through auctions held four years ago. It is now seeking to buy 850,000 barrels per day (bpd) of Iraqi oil, 30 per cent of estimated 2014 exports.
Its dominant role in Iraqi oilfields sat uneasily with Baghdad at first. That changed when China's quick, cost-effective ramp-up in production helped push Iraq up the Opec ranks to second spot behind Saudi Arabia from a virtual standing start after the disruptions of the US-led invasion in 2003.
"The Chinese are our commercial partners in managing and developing oilfields that are totally Iraqi. So I don't see any issue of dominance or threats," said Thamir Ghadhban, chairman of the advisory commission to Iraq's Council of Ministers. "It's the other way round. I think the Chinese find Iraq to be their favourite partner."
Further expansion is in the works. PetroChina's anticipated purchase of a 25 per cent share in ExxonMobil's West Qurna-1 oilfield project will allow China's biggest energy firm to overtake Russia's Lukoil to become the biggest single foreign investor in Iraqi oil.
"China's strong position means the oil ministry has fewer qualms if Western companies back out because they are seen as being more readily replaceable," said an Iraqi analyst.