Since the American-led invasion of 2003, Iraq has become one of the world’s top oil producers, and China is now its biggest customer.
China already buys nearly half the oil that Iraq produces, nearly 1.5 million barrels a day, and is angling for an even bigger share, bidding for a stake now owned by Exxon Mobil in one of Iraq’s largest oil fields…
Before the invasion, Iraq’s oil industry was sputtering, largely walled off from world markets by international sanctions against the government of Saddam Hussein, so his overthrow always carried the promise of renewed access to the country’s immense reserves. Chinese state-owned companies seized the opportunity, pouring more than $2 billion a year and hundreds of workers into Iraq, and just as important, showing a willingness to play by the new Iraqi government’s rules and to accept lower profits to win contracts.
“We lost out,” said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. “The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply…”
The Iraqi government needs the investment, and oil remains at the heart of its political and economic future. Currently OPEC’s second largest oil producer after Saudi Arabia, the Iraqi government depends on oil revenues to finance its military and social programs. Iraq estimates that its oil fields, pipelines and refineries need $30 billion in annual investments to reach production targets that will make it one of the world’s premier energy powers for decades to come…
But the kind of investment that is necessary has required contracting the services of foreign oil companies that are not always enthusiastic about Iraq’s nationalistic, tightfisted terms or the unstable security situation that can put employees in danger. Some like Statoil of Norway have left or curtailed their operations.
But the Chinese, frequently as partners with other European companies like BP and Turkish Petroleum, have filled the vacuum. And they have been happy to focus on oil without interfering in other local issues. “The Chinese are very simple people,” said an Iraqi Oil Ministry official who spoke on the condition of anonymity because he did not have permission to speak to the news media. “They are practical people. They don’t have anything to do with politics or religion. They just work and eat and sleep.”
I have to think Dick Cheney didn’t plan it this way.