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“Most of them are not developed.” What is the secret of Chinese companies’ monopolization of oil contracts in Iraq?
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2024-05-15 15:31
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Shafaq News/ Iraq seeks to attract billions of dollars in investments to develop the oil and gas sector, at a time when it is looking to increase local production of petrochemicals and stop gas imports from neighboring Iran, which is currently essential for energy production.
The experts who spoke to Shafaq News Agency criticized the Chinese companies’ monopolization of licensing round contracts, most of which are not advanced companies in the field of oil technology. It would have been better to have diversified companies and bring in Western companies instead of Chinese ones.
Article 111 of the Iraqi Constitution stipulates that oil and gas belong to the Iraqi people, so it is not permissible to bring in foreign companies to own a share of these fields, but rather according to clear service contracts, but what is currently happening is a violation of this constitutional article, according to what experts in the oil field say. .
On May 11, Chinese companies won contracts to explore five Iraqi oil and gas fields, as part of the projects attached to the fifth (supplementary) licensing round and the sixth licensing round. The licensing round aims primarily to increase gas production for local use.
More than 20 companies qualified for the licensing round, including European, Chinese, Arab and Iraqi groups.
But it was noticeable that there were no major American oil companies, even after Iraqi Prime Minister Muhammad Shiaa Al-Sudani met with representatives of American oil companies during an official visit to the United States last month.
Chinese hegemony
"Chinese hegemony" has become clear over Iraqi oil fields, as it has become the main operator in 13 oil and gas fields in the country, according to economic expert, Nabil Al-Marsoumi.
Al-Marsoumi explained in a post on Facebook on May 11, viewed by Shafaq News Agency, that “Chinese companies won five fields within the fifth and sixth licensing rounds. The Zhongman Group won the development of the East Baghdad field - the northern extensions, in addition to the Middle Euphrates field, which It extends between the governorates of Najaf and Karbala.
He added, "The Chinese United Energy Group won the investment in the Al-Faw field in Basra, while the Chinese Zhenhua Company won the development of the Al-Qarnain field on the border between Iraq and Saudi Arabia. The Chinese company (Geo-Jed) also won the development of the Zurbatiyah field in Wasit Governorate."
He explains, "China has thus become the dominant and main operator in 13 oil and gas fields in Iraq."
She got used to the Iraqi situation
In turn, a member of the Parliamentary Oil and Gas Committee, Kazem Jarro, explains the reason for “Chinese hegemony” by saying that “Chinese companies accept the cheapest prices compared to the prevailing prices, and they work under any circumstances as a result of their influence on the security situation and weather fluctuations in Iraq, so China entered these projects.” ".
Speaking to Shafaq News Agency, Jarro pointed out that “foreign companies are still afraid of the security situation, and the investor does not prefer to invest in Iraq in light of the permanent oil problems, in addition to the social and tribal problems in their areas of operation, in addition to the demonstrations of the unemployed in front of those fields.” Therefore, foreign companies refuse to work in such an environment.”
Regarding Iraqi companies, he says, “There are no local companies in Iraq with the financial capabilities that qualify them to work in extraction, as the matter is not limited to technical minds only, but rather requires money because foreign companies are the ones who spend on all the extraction equipment until export, and sometimes It exports and its financial payments are delayed, and these payments may be paid in installments, and there are no Iraqi companies capable of and having financing or capital that would qualify them to work in such projects and then receive the money.”
It is noteworthy that, on March 27, the Acting Speaker of the House of Representatives, Mohsen Al-Mandalawi, called on Chinese companies to implement long-term investment projects and sustainable cooperation in Iraq, stressing his support for legislating laws that contribute to the influx of solid companies into the country.
Al-Mandalawi said in a statement received by Shafaq News Agency, during his meeting with a number of heads of Chinese companies, that "Iraq is witnessing competition between major reputable international companies for investment in various fields and sectors."
He added that during the meeting, the projects that Chinese companies are implementing in the fields of energy, infrastructure, roads, bridges, etc. were discussed, and the rates of achievement achieved in them, as well as the challenges they face.
Al-Mandalawi pledged to overcome these obstacles and address them with the relevant authorities.
"Bypassing the Constitution"
But on the other hand, the expert in oil and energy affairs, Salah Al-Moussawi, confirms that “the Iraqi constitution does not allow foreign oil companies to be partner companies for Iraq in oil and gas fields.”
Al-Musawi explains during his talk to Shafaq News Agency, “Article 111 of the Constitution affirms that oil and gas belong to the Iraqi people, so it is not permissible to bring Russian, American, British or other companies in the form of companies that own a share of these fields, but rather it is permissible to bring them according to service contracts.” Whether by drilling, production, or any other matters.”
He added, "But what is happening is a violation of this constitutional article, as foreign companies began to come in and have ownership in these fields, as is happening in some Kurdistan fields, where 80% of oil imports go to Turkish companies."
He points out that "the great corruption in Iraq is what prompted the introduction of Chinese companies, most of which are not advanced companies in the field of oil technology. It would have been better to bring Western, American and other companies, and there would be a tender and the field would remain for the Iraqi government."
He continues, "But due to incorrect handling of oil ownership rights, the fields became the property of Chinese and other foreign companies, in violation of the Iraqi constitution."
Reasons for Chinese monopoly
For his part, Kovind Sherwani, an expert in oil and gas affairs, confirms that “it was preferable and expected that there would be diversity in the companies that obtained contracts in the licensing rounds, and that Chinese companies should not be limited to just one Iraqi company.”
Sherwani explains in an interview with Shafaq News Agency, “The reason why about 7 Chinese companies monopolize 10 contracts is because they have adapted to the administrative system, how this sector is managed, and the method of licensing rounds. Some of them may have previously been present in the country, which gave them the opportunity to build good relationships with certain administrative circles.” In the Iraqi Ministry of Oil.
He points out that "China is the largest importer of energy, and therefore it is seriously looking for investments in energy that guarantee it supplies free of American sanctions that may hinder its activities in other places in the world."
Sherwani's statement is reinforced by what was announced by the Iraqi Oil Marketing Company, SOMO, on January 29, that Chinese oil companies were the largest in number to purchase Iraqi oil during the month of December 2023.
"SOMO" stated in statistics published on its official website and viewed by Shafaq News Agency, that "Chinese companies were the largest in number among other international companies in purchasing Iraqi oil, with 12 companies out of 44 companies purchasing oil during the month of last December."
As for not relying on Iraqi companies, the expert in oil and gas affairs explains, “In the past, there were departments and institutions in the Ministry of Oil that handled such work, but the interruption of training and the failure to keep up with the progress of technology and providing these institutions with modern equipment made them lag behind in the new matters required in Developing and increasing oil production, and thus the Ministry of Oil has become dependent in all of this work on foreign companies for the purpose of exploration, development, gas investment, etc.
Sherwani notes, “But the happy thing is that there is one Iraqi private company that was able to obtain three contracts. This company was able to develop itself and have experience in more than one detail in the oil industry, such as refineries, production, and pipelines. Therefore, by virtue of its experience, it was able to obtain three contracts.” ".
He adds, "This is a happy matter because it indicates that some local companies have become at an advanced level, competing with foreign companies," calling for "giving preference to the Iraqi competitor when he is present in such fields."
[You must be registered and logged in to see this link.]
[You must be registered and logged in to see this image.]
2024-05-15 15:31
Share
Font
Shafaq News/ Iraq seeks to attract billions of dollars in investments to develop the oil and gas sector, at a time when it is looking to increase local production of petrochemicals and stop gas imports from neighboring Iran, which is currently essential for energy production.
The experts who spoke to Shafaq News Agency criticized the Chinese companies’ monopolization of licensing round contracts, most of which are not advanced companies in the field of oil technology. It would have been better to have diversified companies and bring in Western companies instead of Chinese ones.
Article 111 of the Iraqi Constitution stipulates that oil and gas belong to the Iraqi people, so it is not permissible to bring in foreign companies to own a share of these fields, but rather according to clear service contracts, but what is currently happening is a violation of this constitutional article, according to what experts in the oil field say. .
On May 11, Chinese companies won contracts to explore five Iraqi oil and gas fields, as part of the projects attached to the fifth (supplementary) licensing round and the sixth licensing round. The licensing round aims primarily to increase gas production for local use.
More than 20 companies qualified for the licensing round, including European, Chinese, Arab and Iraqi groups.
But it was noticeable that there were no major American oil companies, even after Iraqi Prime Minister Muhammad Shiaa Al-Sudani met with representatives of American oil companies during an official visit to the United States last month.
Chinese hegemony
"Chinese hegemony" has become clear over Iraqi oil fields, as it has become the main operator in 13 oil and gas fields in the country, according to economic expert, Nabil Al-Marsoumi.
Al-Marsoumi explained in a post on Facebook on May 11, viewed by Shafaq News Agency, that “Chinese companies won five fields within the fifth and sixth licensing rounds. The Zhongman Group won the development of the East Baghdad field - the northern extensions, in addition to the Middle Euphrates field, which It extends between the governorates of Najaf and Karbala.
He added, "The Chinese United Energy Group won the investment in the Al-Faw field in Basra, while the Chinese Zhenhua Company won the development of the Al-Qarnain field on the border between Iraq and Saudi Arabia. The Chinese company (Geo-Jed) also won the development of the Zurbatiyah field in Wasit Governorate."
He explains, "China has thus become the dominant and main operator in 13 oil and gas fields in Iraq."
She got used to the Iraqi situation
In turn, a member of the Parliamentary Oil and Gas Committee, Kazem Jarro, explains the reason for “Chinese hegemony” by saying that “Chinese companies accept the cheapest prices compared to the prevailing prices, and they work under any circumstances as a result of their influence on the security situation and weather fluctuations in Iraq, so China entered these projects.” ".
Speaking to Shafaq News Agency, Jarro pointed out that “foreign companies are still afraid of the security situation, and the investor does not prefer to invest in Iraq in light of the permanent oil problems, in addition to the social and tribal problems in their areas of operation, in addition to the demonstrations of the unemployed in front of those fields.” Therefore, foreign companies refuse to work in such an environment.”
Regarding Iraqi companies, he says, “There are no local companies in Iraq with the financial capabilities that qualify them to work in extraction, as the matter is not limited to technical minds only, but rather requires money because foreign companies are the ones who spend on all the extraction equipment until export, and sometimes It exports and its financial payments are delayed, and these payments may be paid in installments, and there are no Iraqi companies capable of and having financing or capital that would qualify them to work in such projects and then receive the money.”
It is noteworthy that, on March 27, the Acting Speaker of the House of Representatives, Mohsen Al-Mandalawi, called on Chinese companies to implement long-term investment projects and sustainable cooperation in Iraq, stressing his support for legislating laws that contribute to the influx of solid companies into the country.
Al-Mandalawi said in a statement received by Shafaq News Agency, during his meeting with a number of heads of Chinese companies, that "Iraq is witnessing competition between major reputable international companies for investment in various fields and sectors."
He added that during the meeting, the projects that Chinese companies are implementing in the fields of energy, infrastructure, roads, bridges, etc. were discussed, and the rates of achievement achieved in them, as well as the challenges they face.
Al-Mandalawi pledged to overcome these obstacles and address them with the relevant authorities.
"Bypassing the Constitution"
But on the other hand, the expert in oil and energy affairs, Salah Al-Moussawi, confirms that “the Iraqi constitution does not allow foreign oil companies to be partner companies for Iraq in oil and gas fields.”
Al-Musawi explains during his talk to Shafaq News Agency, “Article 111 of the Constitution affirms that oil and gas belong to the Iraqi people, so it is not permissible to bring Russian, American, British or other companies in the form of companies that own a share of these fields, but rather it is permissible to bring them according to service contracts.” Whether by drilling, production, or any other matters.”
He added, "But what is happening is a violation of this constitutional article, as foreign companies began to come in and have ownership in these fields, as is happening in some Kurdistan fields, where 80% of oil imports go to Turkish companies."
He points out that "the great corruption in Iraq is what prompted the introduction of Chinese companies, most of which are not advanced companies in the field of oil technology. It would have been better to bring Western, American and other companies, and there would be a tender and the field would remain for the Iraqi government."
He continues, "But due to incorrect handling of oil ownership rights, the fields became the property of Chinese and other foreign companies, in violation of the Iraqi constitution."
Reasons for Chinese monopoly
For his part, Kovind Sherwani, an expert in oil and gas affairs, confirms that “it was preferable and expected that there would be diversity in the companies that obtained contracts in the licensing rounds, and that Chinese companies should not be limited to just one Iraqi company.”
Sherwani explains in an interview with Shafaq News Agency, “The reason why about 7 Chinese companies monopolize 10 contracts is because they have adapted to the administrative system, how this sector is managed, and the method of licensing rounds. Some of them may have previously been present in the country, which gave them the opportunity to build good relationships with certain administrative circles.” In the Iraqi Ministry of Oil.
He points out that "China is the largest importer of energy, and therefore it is seriously looking for investments in energy that guarantee it supplies free of American sanctions that may hinder its activities in other places in the world."
Sherwani's statement is reinforced by what was announced by the Iraqi Oil Marketing Company, SOMO, on January 29, that Chinese oil companies were the largest in number to purchase Iraqi oil during the month of December 2023.
"SOMO" stated in statistics published on its official website and viewed by Shafaq News Agency, that "Chinese companies were the largest in number among other international companies in purchasing Iraqi oil, with 12 companies out of 44 companies purchasing oil during the month of last December."
As for not relying on Iraqi companies, the expert in oil and gas affairs explains, “In the past, there were departments and institutions in the Ministry of Oil that handled such work, but the interruption of training and the failure to keep up with the progress of technology and providing these institutions with modern equipment made them lag behind in the new matters required in Developing and increasing oil production, and thus the Ministry of Oil has become dependent in all of this work on foreign companies for the purpose of exploration, development, gas investment, etc.
Sherwani notes, “But the happy thing is that there is one Iraqi private company that was able to obtain three contracts. This company was able to develop itself and have experience in more than one detail in the oil industry, such as refineries, production, and pipelines. Therefore, by virtue of its experience, it was able to obtain three contracts.” ".
He adds, "This is a happy matter because it indicates that some local companies have become at an advanced level, competing with foreign companies," calling for "giving preference to the Iraqi competitor when he is present in such fields."
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