China may have sat out the Iraq war, but that does not stop it eyeing up the spoils of war. Desperate to find it new sources of oil to fuel its growing economy, it could be the first country to take advantage of Iraqi’s new controversial Oil Law.
The Iraqi oil law will open the door for a free-for-all for foreign oil companies. American and British oil companies have been maneuvering to get access to the country’s vast untapped reserves.
But international oil majors — companies like Royal Dutch Shell and Total — are likely to try to sign leasing agreements to stake their claims, but then wait for the fighting to die down. It could take five years or more before they begin extracting big shipments of Iraqi crude. That gives China a unique opportunity.
China is so desperate for energy that Beijing’s government-owned oil companies may be willing to accept higher security risks than others. China’s strategic needs could lead its national oil companies to be early developers of Iraqi fields, perhaps in joint ventures with Western firms.
However some believe that Iraq is even a step too far for the Chinese. Sharif Ghalib, a senior analyst with Energy Intelligence Research in New York. “The Chinese oil companies have gone into Sudan and Iran, discounting threats of boycotts. But I don’t think they’ll be willing to risk their people in Iraq. They’d endanger thousands of technicians and face disruptions all the time.”