Iraq's oil ministry signs 13 contracts for oil field development and exploration

Iraq's oil ministry has initialed the 13 contracts for oil fields and exploration blocks that were awarded in the most recent licensing round held May 11-13.

In an Aug. 14 ceremony in Baghdad, oil minister Hayan Abdul Ghani said the contracts, when fully developed, will add 750,000 b/d of oil and 850 MMcf/d of gas, offering flexibility to power stations supply and supporting the Iraqi energy sector, according to a ministry statement from the same day.

The contracts signed were with: China's ZPEC for the East Baghdad and Middle Furat oil fields, and the Qurnain and Abu Khaima blocks; Hong Kong-based UEG for the Fao Block; China's Geo-Jade for the Zurbatiya and Jebel Sanam blocks; China's Sinopec for the Summer block; China's CNOOC for Block 7; China's Anton Oil for Al-Dhifriya oil field, and Kurdistan-based KAR for the Al-Dima, Sassan and Alan oil fields and the Khilaisiya exploration block.

The licensing round 5 plus (LR5+) and licensing round 6 (LR6) auctioned 29 projects, but only 13 were awarded despite offering profit sharing contracts, the percentage of which was the bidding criteria and reduced royalties.

The results further consolidate China's dominance in Iraq's oil and gas sector. The East Asian country, which imported 166.6 million barrels (915,385 b/d) from Iraq in the first six months of 2024, relies heavily on Middle Eastern crude to meet domestic demand. China manages one-third of Iraq's proven reserves and two-thirds of Iraq's current production, according to S&P Global Commodity Insights estimates.

"China's appetite for Iraqi oil stems not only from its large crude import requirements -- averaging 11.1 million b/d for H1 2024 -- but also due to large investments of Chinese oil companies in Iraq's upstream sector," said Kang Wu, global head of oil demand research at Commodity Insights in July.