In a significant development highlighting China’s deepening involvement in Iraq, a senior Iraqi official has disclosed plans to potentially increase Iraq’s crude oil supply to China by 50%.
This move is set to fortify the landmark oil-for-project agreement that has been a cornerstone of Sino-Iraqi economic relations since 2019.
Historic Oil-for-Project Deal
In 2019, Iraq inked a monumental 20-year contract, agreeing to supply Chinese firms with 100,000 barrels per day (bpd) of crude oil. This arrangement was not just a trade deal but a strategic pact to exchange oil for infrastructural development. The revenue from the oil exports is earmarked for funding various development projects in Iraq, thereby creating a symbiotic relationship between the two nations.
Planned Expansion and Its Implications
Mazhar Mohammed Saleh, the finance advisor to Iraq’s Prime Minister, conveyed that the Iraqi government is contemplating elevating oil supplies to China to 150,000 bpd. This increase aligns with Iraq’s broader strategy to leverage its oil reserves for infrastructural and social development. According to the Iraqi News Agency (INA), the funds generated from these additional oil sales will be directly invested in various initiatives within the country’s budget.
Chinese Contributions Under the 2019 Agreement
The 2019 agreement has already seen substantial Chinese involvement in Iraq’s development. Projects undertaken include the construction of 1,000 schools, development of the Nasiriya city airport, erection of power plants, and several other infrastructural projects. These initiatives represent a tangible manifestation of the deal’s impact on Iraq’s socio-economic landscape.
Future Collaborations
In addition to the existing projects, Chinese construction firms are poised to commence new ventures, including the construction of multiple hospitals across Iraq. A significant focus is also on a large housing project aimed at benefiting low-income Iraqi families, currently in the research phase.
Analysis
China’s investment in Iraq, particularly through this oil-for-project arrangement, is indicative of its broader Belt and Road Initiative (BRI), aiming to expand its global influence through infrastructural development. For Iraq, ravaged by years of conflict and instability, this deal represents an opportunity to rebuild and develop, using its oil resources as a lever for growth.
This evolving partnership between China and Iraq, centered on a blend of energy supply and infrastructural development, marks a significant chapter in the geopolitics of the region. It underscores how natural resources, particularly oil, continue to shape international relations and development strategies in the 21st century.
