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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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    The Iraqi government thwarts plans to sell oil stakes to China and dominate it

    Rocky
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    The Iraqi government thwarts plans to sell oil stakes to China and dominate it Empty The Iraqi government thwarts plans to sell oil stakes to China and dominate it

    Post by Rocky Wed 18 May 2022, 8:26 am

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    Time: 05/18/2022 
     
    {Economic: Al Furat News} The Iraqi Oil Ministry thwarted three potential deals last year that would have given Chinese companies more control over Iraq's oil fields, and lead to the displacement of major international oil companies that Baghdad wants them to invest in its faltering economy, according to a Reuters report.
    Since the beginning of 2021, Russia's Lukoil (LKOH. MM) and major US oil company ExxonMobil (XOM.N) have planned to sell stakes in key fields to Chinese state-backed companies, the agency said, citing Iraqi oil officials and industry executives.
    The agency quoted people it described as familiar with the matter as saying that selling a stake to a Chinese state-run company was also one of several options being studied by British Petroleum, but officials persuaded it to stay in Iraq for the time being.
    China is the largest investor in Iraq, and Baghdad was the biggest beneficiary last year of the Belt and Road Initiative launched by Beijing, which received $10.5 billion in financing for infrastructure projects including a power plant and an airport.
    However, Reuters says, the Iraqi government and officials in state-run companies are concerned that more fields in the hands of Chinese companies may accelerate the exodus of Western oil companies, a total of seven Iraqi oil officials and executives of companies operating in Iraq told Reuters in interviews. .
    Backed by officials of the state-run oil company, Iraq's Oil Minister Ihsan Abdul-Jabbar prevented Lukoil from selling a stake in one of the country's largest fields, West Qurna 2, last year to China's state-run Sinopec, three people familiar with the matter said. command.
    People familiar with the matter said that Iraqi officials also intervened last year to prevent Chinese state-backed companies from buying Exxon's stake in West Qurna 1 and to persuade BP to stay in Iraq instead of transferring its stake in the giant Rumaila oil field to a Chinese company.
    Rumaila and West Qurna together produce about half of the crude coming from Iraq, which has the fifth largest oil reserves in the world.
    The Iraqi Oil Ministry did not respond to Reuters requests for comment on the deals or the minister's role in any interventions, according to the agency.
    Two government officials told Reuters the government was concerned that China's dominance could make Iraq less attractive for investment than elsewhere.
    Some officials said China's strengthening relationship with Iran has helped its position in Iraq due to Tehran's political and military influence there, but the Oil Ministry is wary of ceding more control over the country's key resources.
    Another Iraqi official said, "We do not want the Iraqi energy sector to be described as an energy sector led by China, and this position is agreed upon between the government and the Ministry of Oil."
    The interventions over the BP, Exxon and Lukoil sites in Iraq come after British oil major Shell (SHEL. L)8 decided to withdraw from Iraq's vast Majnoon oil field in 2018.
    The interventions also represent a turnaround after Chinese companies won the most energy deals and contracts awarded over the past four years.
    Iraqi oil officials said the Chinese companies had accepted lower profit margins than most competitors.
    It quoted a statement from the state-owned China National Offshore Oil Corporation that "all the rules related to tenders were jointly formulated by the Chinese and Iraqi sides and conducted under transparent and fair principles."
    However, giving more Chinese investment is a risky strategy, says Reuters, and the government needs billions of dollars to rebuild the economy after the defeat of ISIS in 2017.
    Over the past decade, oil revenues have accounted for 99 percent of Iraq's exports, 85 percent of the country's budget, and 42 percent of its gross domestic product, according to the World Bank.
    As oil majors scrambled to gain access to Iraq's vast oil fields after the US-led military intervention in Iraq in 2003, they are increasingly focusing on energy transitions and better terms for developing the fields, oil executives said.
    China is among the largest buyers of Iraqi crude oil, and Chinese state companies have built a dominant position in the oil industry.
    But when Lukoil notified the government last summer that it was considering selling some of its stake in West Qurna 2 to Sinopec, the oil minister stepped in, people familiar with the matter said.
    It was not previously mentioned that Sinopec was the potential buyer of Lukoil's stake. The Chinese company did not respond to a request for comment.
    To encourage Lukoil to stay, Baghdad finally agreed to its plan to develop a field known as Block 10, where the Russian company discovered oil reserves in 2017.
    After that, Lukoil abandoned the idea of selling its stake in West Qurna 2, according to the source.
    Lukoil did not respond to a Reuters request for comment.
    BB and Exxon
    Over the past few years, BP has also spoken to the government about its options - including leaving Iraq entirely - before settling on converting its Rumaila stake to an independent company last year, two people familiar with the matter said.
    Representatives of the sources said that Oil Minister Abdul-Jabbar led efforts to persuade BP not to leave because the government was concerned that its partner in the field, China National Petroleum Corporation, would buy BP's stake. They said Baghdad is also keen to keep such a leading international oil company in the country.
    BP declined to comment to the agency.
    And when Exxon indicated its intention to leave Iraq in January 2021, US officials said they were unhappy with the prospect of withdrawing the largest US oil company — for reasons similar to Iraqi concerns.
    US State Department officials said Exxon's departure could create a vacuum for Chinese companies to fill, a person familiar with the talks told Reuters.
    US officials then asked Exxon what it would take to stay in Iraq, the person said, declining to give further details.
    "We regularly engage with our Iraqi counterparts in promoting an enabling environment for private sector investment," a State Department spokesman said.
    Iraq has a veto over oil field deals and has not agreed to this deal.
    Exxon has applied for arbitration with the International Chamber of Commerce against the Basra Oil Company, arguing that it followed the terms of the contract for West Qurna 1 and had a good deal on the table, people familiar with the matter said.
    The Oil Ministry took the unusual step of trying to broker the deal on behalf of Exxon, and the ministry offered Exxon's stake to other Western companies including Chevron Corp. (CVX.N).
    Rather than letting the stake go to Chinese companies, Baghdad said the state-run Iraq National Oil Company would take it instead, even though the Iraq National Oil Company is still in the process of reviving after its hiatus for many years.
    "(Exxon) will continue to work closely and constructively to find a just solution," a company spokeswoman said.
    Iraq's oil industry relies mostly on technical service contracts between the state-backed Basra Oil Company and foreign companies that are paid for in addition to fees per barrel to develop the fields, while Iraq retains ownership of the reserves.
    The major oil companies usually prefer deals that allow a share in the profits rather than a set fee.
    However, the priority for Chinese companies is to achieve safe oil supplies to fuel the growing Chinese economy, rather than generating returns for investors, said a Chinese oil executive with direct knowledge of CNPC's global investments.
    Reuters says that there is some indication that Iraq is trying to make its terms more attractive to companies.
    It quoted analysts as saying that unless Iraq's conditions improve significantly, it is difficult to imagine that Iraq will be able to stop the exodus of companies with a change in the global trend towards carbon emissions.
    And the agency quotes Ian Thom, director of research at consultancy Wood Mackenzie, as saying that "many major energy companies are looking at carbon emissions, their ability to generate cash flows if commodity prices are low, and are looking to improve returns," adding, "With the changing priorities of energy companies, The relative attractiveness of Iraq is changing.



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