As the Western oil majors squabble with Iraq over technical contracts, they have been out-maneuvered by the Chinese in the greater race to sign the first significant contract with the war-torn country.

The first major oil deal Iraq has signed since 2003 is not with BP or Shell but with China’s biggest oil company, state-run CNPC in a deal that could be worth $3 billion.

Under the new contract, which still has to be approved by Iraq’s cabinet, the Chinese company will provide technical advisers, oil workers and equipment to help develop the Ahdab oil field southeast of Baghdad.

The 22-year contract is a renegotiated version of a 1997 agreement between China and Saddam Hussein. The original contract included production-sharing rights, but under the new contract China will be paid for its services but will not share in profits.

“The biggest significance of this deal is that CNPC will benefit as the first international oil company to be developing one of the giant discovered oil fields in Iraq in the new era,” said Alex Munton, analyst at global consultancy Wood Mackenzie. “They will be the first with people on the ground and the first to develop a working relationship with Iraq’s oil ministry.”

Shell, BP and Exxon must be fuming…


  • Its good see the 1/2 trillion dollars we borrowed from China to pay for the war in Iraq has helped to relieve the demand for oil…in China! Not to mention the 4,000 dead American soldiers. Way to go Bush/McCain!

  • why is this deal being kept so hush hush by everyone on both sides even the news medaia .i feel our troops shoud be issued chinnese uniforms since they are fighting for their benifit .an unhappy vet

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