Since the 1990s, the Middle East’s geopolitical landscape has been shaped by China’s need for energy to fuel its economic growth and challenge U.S. global dominance. Iraq, with its vast oil and gas reserves, has been at the center of this competition. With roughly 145 billion barrels of oil and 3.5 trillion cubic meters of gas, Iraq holds one of the world’s largest energy resources. U.S. forces remained in Iraq after the 2003 ousting of Saddam Hussein, limiting China’s ability to expand its presence. However, by 2018, Iraq’s dissatisfaction with the ongoing U.S. presence and Washington’s withdrawal from the Iran nuclear deal provided China an opportunity to increase its influence.
In 2019, China and Iraq signed the ‘Oil for Reconstruction and Investment’ agreement, a pivotal step in China’s expanding role in Iraq. The agreement, which included preferential oil contracts and significant discounts on oil and gas production, followed the framework of China’s broader 25-year agreement with Iran, which was first revealed in 2019. This agreement was expanded in 2021 to the ‘Iraq-China Framework Agreement,’ which granted Chinese companies more rights, including permission to station security forces and build infrastructure projects across Iraq.
A key component of China’s expansion in Iraq is the West Qurna 1 oil field, located near Basra, Iraq’s primary oil export hub. With an estimated 22 billion barrels of recoverable oil, West Qurna 1 is central to Iraq’s oil production strategy. In 2021, Iraq raised the field’s production target from 500,000 barrels per day (bpd) to 700,000 bpd. While ExxonMobil previously held a 32.7% stake in the field, it pulled out of the project due to legal and financial challenges, allowing China’s PetroChina to take full control.
China’s increasing influence in Iraq extended beyond oil production. In 2019, the China Petroleum Engineering & Construction Corp. won a $121 million contract to upgrade gas extraction facilities at West Qurna 1. This marked the beginning of China’s broader expansion across Iraq, with several other infrastructure projects, including deals for Iraq’s supergiant Majnoon oil field. These ‘contract-only’ deals allowed China to incrementally increase its control over Iraq’s oil industry.
By 2021, as the U.S. ended its combat mission in Iraq, China was positioning itself to take control of Iraq’s energy sector. Beijing’s new phase of operations in West Qurna 1 is not focused on increasing oil production but on developing special projects in Iraq’s Basra Province. According to recent announcements by Iraq’s Oil Ministry, China has begun constructing a new field operations center in the Al-Sadiq District, aimed at managing water injection, gas processing, and overall production. This project will also include new infrastructure such as roads, electricity projects, and schools, further integrating China’s interests into Iraq’s development.
China’s influence in Iraq is also expanding through infrastructure investments. The 2021 agreement has led to the construction of a dual-use airport in Dhi Qar, home to two of Iraq’s largest oil fields, Gharraf and Nassiriya. This airport will support both military and civilian needs and connect key oil areas in southern Iraq. Additionally, China is involved in $700 million worth of infrastructure projects in Basra, including road networks and schools.
In August, Chinese firms won 13 contracts for oil fields and exploration blocks in Iraq, set to add 750,000 bpd of oil and 850 million cubic feet of gas to the country’s output. With these new developments, Chinese companies now manage over a third of Iraq’s proven oil and gas reserves and two-thirds of its production.
Moreover, in June, Chinese and Iraqi officials announced plans to integrate Iraq’s $17 billion Strategic Development Road (SDR) project with China’s Belt and Road Initiative (BRI). The SDR aims to create a seamless transport corridor connecting Basra’s deepwater Al Faw Grand Port to several of Iraq’s largest oil fields, extending into Turkey and eventually reaching Europe. By integrating the SDR into the BRI, China strengthens its position as a key player in Iraq’s oil sector and the broader Middle East.
China’s growing presence in Iraq not only enhances its energy security but also secures its role as a dominant geopolitical force in the region, with a strategic foothold in both oil production and infrastructure development.
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