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Tom Kirkman

China Prepares To Close ‘Oil Deal Of A Lifetime’ In Iraq

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I'm *not* Oil Price staff.

I *don't* get paid to be a moderator here.

It's just that I happen to like commenting about oil & gas.  A lot of commenting, for many years, for the fun of it.

That said, it is nice to see that the Oil Price main news site is one of the few sites that is offering some level-headed analysis of the oil world during the media Covid Panic of 2020.

If you believe that the China Virus will  KILL  US  ALL  ZOMG !  then you should probably be preparing for your own imminent demise rather than spending your precious last days of life on this forum.

However, if you suspect that you may possibly still be alive for Christmas this year, and that life on planet earth may somehow continue, and you still have an interest in international oil & gas + its intertwined global politics, you may wish to turn off CNN and ignore WaPo and instead read some of the articles on the Oil Price main news site here.  Like this one:


China Prepares To Close ‘Oil Deal Of A Lifetime’ In Iraq

... For years, structural damage has been done to the area by the erosion of subsoil across over one million hectares of forest and brush land by the Islamic Revolutionary Guard Corps (IRGC) as a result of building programmes. This has been worsened by the redirection of many of the natural water flows through the building of dams and again by Iran’s irrigation systems that have been sending clean and waste water into Iraq for decades. A 2011 study by the University of Basra warned that the infrastructure was not able to handle Iranian inflows, with the danger zone concentrated in an area where the Majnoon oil pipelines feed the gas-oil separation station. However, as a senior source who works closely with Iran’s Petroleum Ministry told last week: “The IRGC invited China into Iran and Iraq and the IRGC is entirely at China’s service.”  

This strategy of gradual encroachment is a Chinese classic, of course, currently being employed very notably where possible across the Asia-Pacific region as well as the Middle East. The modus operandi is: offer lots of money to cash-strapped countries (which most emerging economies are) that are tied in to future project developments, then leverage this into the building out of on-the-ground infrastructural projects (that have employment and revenue benefits for the host countries as well), and then turn the screw by inveigling the host countries to give China extremely preferential terms on something it wants (in the Middle East it is oil and gas and land transit routes, and in Asia Pacific it is other natural resources and international port usage). Although in the Middle East, China is still partly trying to cover its intentions by using non-headline companies on ‘contractor-only’ specific work projects – just like CPECC – it does not take much digging to find the real interest. 

Not only is CPECC a subsidiary of Chinese oil behemoth, China National Petroleum Corporation (CNPC), but also it was the very same company that was recently awarded exactly the same type of contract (US$121 million for ‘engineering work’ that time) for Iraq’s supergiant West Qurna-1 oilfield, also located very close to Iraq’s principal oil hub of Basra. “At some point the U.S. is going to wake up and find out that it has lost the entire Middle East, including Iraq and Saudi,” concluded the Iran source. 


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