China’s CNOOC secures major contract in Iraq

By Asif Aydinli

China ’s CNOOC Africa Holding Ltd., a subsidiary of CNOOC Limited , has solidified its presence in Iraq’s oil and gas sector by securing an EDPC (Exploration, Development, and Production Contract) with Midland Oil Company (Md.O.C). This contract grants CNOOC exclusive rights to explore, develop, and extract hydrocarbons from Iraq’s Block 7, marking a substantial addition to China’s energy portfolio in the region.

The EDPC agreement ensures that CNOOC Africa Holding Ltd. will hold a 100% interest in the exploration and production activities of Block 7, located in Iraq’s southern provinces. This region spans over 6,300 square kilometers, covering the provinces of Al-Najaf, Al-Muthanna, Wasit, Babylon, and Diwaniyah—near prominent fields like Nasiriyah and Garraf. By securing this contract, CNOOC gains the operational lead in exploring a highly prospective block within Iraq's Mesopotamian tectonic region, known for its rich petroleum deposits.

The first phase of the contract, dedicated to geological and exploration studies, is projected to last three years, during which CNOOC will evaluate the block's potential reserves. With China’s expanding oil demand, this deal fortifies CNOOC’s efforts to secure new, profitable reserves beyond China’s borders.

Block 7’s strategic location within Iraq’s Mesopotamian tectonic zone adds significant importance to this agreement. Iraq currently holds the world’s second-largest crude oil reserves, second only to Saudi Arabia. The region of southern Iraq has historically been a focal point for international oil companies due to its high hydrocarbon content and accessibility compared to northern Iraqi fields, which often face logistical and geopolitical hurdles.

By locking in a 100% interest in this block, CNOOC strengthens its competitive advantage and deepens China’s influence over Iraq’s oil sector—a sector that has witnessed increasing interest from Chinese oil companies over recent years. Notably, this contract was awarded as part of Iraq’s fifth licensing round, held in May 2024, which saw Chinese companies emerge as dominant players among a pool of 20 qualified participants. Interestingly, this round featured Iraq’s first offshore exploratory block in the Persian Gulf , underscoring Iraq’s ambition to diversify its oil exploration potential.

Iraq’s fifth licensing round covered 29 projects across 12 provinces, mostly situated in the central and southern parts of the country. With a strong presence of Chinese companies among the top bidders, the results underline a growing shift in the global oil market as Western oil majors remain conspicuously absent. U.S. oil majors, in particular, did not participate in this licensing round, continuing a trend where Chinese and regional Middle Eastern firms have increasingly outpaced Western companies in bidding for Iraq’s oil blocks.

The fifth licensing round’s outcome is a testament to the growing Sino-Iraqi partnership in energy exploration and development. As Iraq diversifies its energy partnerships and continues to invest in under-explored blocks, including offshore areas in the Persian Gulf, Chinese companies have been quick to respond to these new opportunities.

China’s deepening involvement in Iraq’s oil sector reflects a broader trend of expanding Chinese influence across Middle Eastern energy resources. With major contracts awarded to Chinese firms over the past two licensing rounds, China is leveraging its oil companies to secure long-term resource stability for its domestic needs. Additionally, Iraq’s emphasis on new licensing rounds indicates its strategic need to engage non-Western partners, potentially signaling a shift in alliances within the region’s energy market.

While Chinese companies continue to secure contracts, other international players, including Russian firms, maintain significant stakes in Iraq. Russia’s Gazprom Neft, for instance, has operated the Badra project since 2010, and Lukoil is producing oil at the West Qurna-2 field. These partnerships contribute to Iraq’s strategy of diversifying its energy collaborators while balancing the involvement of Chinese, Russian, and other regional players.

CNOOC’s recent EDPC contract with Midland Oil Company for Block 7 adds to China’s expanding portfolio in Iraq’s energy market, amplifying Chinese influence in a region historically dominated by Western oil companies. With this deal, CNOOC secures a vital asset in a geopolitically critical area, underscoring China’s strategic efforts to diversify and stabilize its energy resources amid growing global demand. As Iraq opens more opportunities for foreign companies, Chinese firms appear well-positioned to capitalize on these investments, further solidifying their footprint in one of the world’s most oil-rich regions.
As Iraq explores more collaborative avenues, the global energy market may witness significant shifts in partnership dynamics and resource allocations, potentially redefining future alliances in the Middle East’s oil industry.

News.Az