BRI: China plans to revive oil-for-projects deal with Iraq

Deal was frozen by pandemic

  
Image used for illustrative purpose. Oil tanks are seen at the gas field of Siba in Basra , Iraq April 25, 2018.

Image used for illustrative purpose. Oil tanks are seen at the gas field of Siba in Basra , Iraq April 25, 2018.

REUTERS/Essam Al-Sudani

China is working to revive a landmark oil-for-projects deal with cash-strapped Iraq after it was frozen due to the spread of COVID-19, a Chinese official has said. 

Xu Chun, the Commercial Attache at the Chinese Embassy in Baghdad, said Beijing has already executed many projects in Iraq as part of that agreement and that there are large Chinese firms operating in OPEC’s second largest oil producer. 

In comments published by Shafaq News and other Iraqi publications on Thursday, Xu said there is a need to restart the oil-for-projects with Iraq. 

“We are in touch with the Iraqi authorities, including the Finance Ministry and the Central Bank, to tackle some issues,” he said. 

“But I can tell you that this agreement with Iraq will be re-activated soon because there is a serious intention to do this.” 

In late 2020, Iraqi officials said there were discussions with Beijing to revive that accord to support the Arab country’s post-war reconstruction projects. 

Iraq, which controls the world's fifth largest crude oil deposits of around 145 billion barrels, signed an agreement with China in 2019 for the supply of 100,000 barrels per day of crude to Chinese firms in exchange for project execution and funding. 

Chinese firms were awarded several projects in Iraq in line with that agreement before it came to a standstill due to the pandemic. 

Xu said China is already one of the largest commercial partners of Iraq, with two-way trade standing at $30.2 billion in 2020. The figure is far below the 2019 trade exchange of around $53.3 billion, according to Xu, who said the decline was owing to lower crude prices and oil exports to China. 

(Writing by Nadim Kawach; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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