Recently, Iraq’s oil minister announced that Chinese companies have secured five more bids to explore oil and gas fields in the country. This news comes as the hydrocarbon exploration licensing round enters its second day, with Chinese companies emerging as the primary winners. Alongside them, Iraqi Kurdish company KAR Group also managed to secure two licenses, making it a significant development in the energy sector.
The oil and gas licenses cover a total of 29 projects, with the primary aim of increasing output for domestic use. With over 20 companies pre-qualifying for the bidding process, there was a diverse pool of participants, including European, Chinese, Arab, and Iraqi groups. The licensing round, which marks Iraq’s sixth overall, highlights the country’s strategic focus on boosting natural gas production to cater to its power plants’ needs, reducing reliance on gas imports from Iran.
Despite the successful bids, it is essential to note that no offers were made for at least six fields with gas potential. This missed opportunity could potentially undermine Iraq’s efforts to ramp up gas production. Additionally, the absence of major U.S. oil companies in the bidding process raises concerns, especially after Iraqi Prime Minister Mohammed Shia’s recent visit to the United States and discussions with representatives of U.S. firms.
Among the notable awards, China’s CNOOC secured a bid for oil exploration in Iraq’s Block 7, spanning several provinces in the country. Other Chinese companies such as ZhenHua, Anton Oilfield Services, and Sinopec also won bids for developing various oil fields across different regions. China’s Geo-Jade emerged as a key player by securing a bid for exploring Iraq’s Jabal Sanam field, signaling a growing presence of Chinese companies in Iraq’s energy sector.
Iraq, being OPEC’s second-largest oil producer after Saudi Arabia, has faced challenges in its oil sector development. Contract terms that are often viewed as unfavorable by major oil companies, along with recurring military conflicts and the increasing investor focus on environmental, social, and governance criteria, have hindered the sector’s growth. It is crucial for Iraq to address these issues to attract a more diverse range of international investors and ensure sustainable development in its energy industry.
While Chinese companies have made significant strides in securing bids for Iraq’s oil and gas fields, there are challenges and missed opportunities that need to be addressed. Iraq must work towards creating a more attractive investment environment for a broader range of international players to ensure the long-term success and sustainability of its energy sector.