Investing Future: China Just Revealed its Russia and Iraq Oil Masterplan to Collapse the US Economy


Investing Future
Nov 21, 2022

‘First, regarding China, Iraq’s newly-appointed Oil Minister, Hayyan Abdul Ghani, shows no signs of reversing the extraordinary ‘oil-for-projects’ agreement that was signed between Iraq and China in the middle of 2019. Last week, in fact, after Ghani’s appointment to his new post by new Prime Minister, al-Sudani, local state-endorsed news agencies reported that Iraq’s Oil Exploration Company OEC and the China National Offshore Oil Corporation CNOOC had begun multiple seismic surveys as part of the first phase of wide-ranging offshore oil and gas exploration between Iraq and China. According to a separate statement from OEC Director, Ali Jassim, CNOOC has started implementing a joint study contract for two-dimensional seismic and geophysical surveys to explore hydrocarbon gatherings in the Iraqi offshores north of the Arabian Gulf. This aligns entirely with the directive of the Iraqi government in October to include ‘vital and strategic projects’ in the 2019 oil-for-projects agreement between Iraq and China. These ‘vital and strategic projects’ include: roads, bridges, infrastructure, energy, oil and electricity, according to Haider Majid, spokesperson for the General Secretariat of the Council of Ministers.

Having effectively now given China the power to do whatever it wants in terms of offshore oil and gas development, Iraq is also allowing Beijing to expand its reach further into key onshore fields as well.

Knowing the trade conflict going on between the US and China, it is clear now that Iran has chosen the side they are betting on. Rejecting the current leading currency in the world in favor of the emerging yuan struck some investors making them keep a closer eye on the yuan as a currency and as a replacement for the petrodollar. Coincidentally Saudi Arabia also wants to cut ties with the US after their unnecessary sanctions on allied country Russia and threats given by Joe Biden due to OPEC wanting to sustain economic growth in their countries amid the pending global recession which is partly due to high inflation rates in the US.

Second, regarding Russia, Iraq’s new Oil Minister also shows no sign of reversing his predecessor’s intention of allowing Russian oil giant, Lukoil, to move ahead with the exploration and development of the huge Eridu oil field, despite Russia’s invasion of Ukraine in February. Located in Block 10, around 120 kilometres west of Basra in southern Iraq, the preliminary consensus opinion was that the field contained between 7 and 10 billion barrels of crude oil reserves. This alone would have made it the biggest oil discovery in Iraq in at least 20 years, but subsequent Russian oil industry estimates point to reserves of up to 12 billion barrels of oil. With a remuneration fee of US$5.99 per barrel – among the highest of all Iraq’s awards under its technical service contract model – and likely peak production of between 250,000 and 300,000 bpd, Lukoil was awarded a 60 percent share in Block 10 in the fourth round of licensing in 2012, along with a 40 percent stake being given to Japan’s Inpex.

Before Russia became a political and economic pariah of the West, following its invasion of Ukraine, Moscow held all the cards in its dealings with Iraq and stalled the development of Eridu as a bargaining tactic to get a better deal on its development of nearby West Qurna 2. At that point back in 2021, Lukoil had a 75 percent stake in West Qurna 2, which it still retains, and had already spent over US$8 billion on developing it, but was only being compensated US$1.15 per barrel recovered.



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