Iraqi Prime Minister Al-Sudani said that as the Chinese proverb says, "clean the house before you treat yourself", Iraq's transfer of control of oil fields from the United States to China means that Iraq has truly bid farewell to the unhappy cooperative relationship in the past. This move not only represents a new chapter in oil and gas cooperation in the Middle East, but also marks an important milestone for China to become a major player in the Middle East energy market.
China National Petroleum Corporation (CNPC) said it held a handover ceremony with Iraq on the first day of the new year, officially taking over a giant oil field in Iraq by the American company ExxonMobil. This is not accidental, but for two reasons. First, there have been ups and downs in cooperation between the United States and Iraq, especially in the energy sector. For example, in 2019, a U.S. company proposed a $53 billion project and tried to share the oil output of two of its oil fields with Iraq, but was rejected by the Iraqi side on the grounds of "infringement of national ownership of petroleum products". Second, the future development direction of the field is precisely the area in which China excels. Iraq said the next priority for the fields is to restore production capacity and develop natural gas, which will require more technical services and equipment**, while China, as an oil powerhouse, is expected to get more orders.
For China, it is of great strategic importance to become the largest holder of the field. First, as one of the world's largest energy importers, securing the right to operate oil fields will help safeguard China's energy needs and add an insurance policy to energy security. Secondly, owning the right to operate the oilfield will give Chinese companies more say and profit margins, and be able to plan and adjust the chain more effectively and reduce market risks. Finally, China's increased investment in the Middle East's oil and gas resources will help China better integrate into the Middle East energy market, strengthen business and economic ties with Middle Eastern countries, and exert greater influence in the global oil industry. This is of key significance for China's steady progress in the global energy landscape.
However, in the current turbulent international situation, especially in politically unstable countries such as Afghanistan and Iraq, Chinese companies face huge security risks when conducting economic cooperation abroad. Since the overthrow of Saddam Hussein's regime by the U.S.-led coalition in 2003, Iraq's political environment has been unstable, with frequent regime changes, factional clashes and terrorist activities. This political uncertainty casts a shadow over economic cooperation, increasing the risk for foreign businesses and people operating locally.
In addition, international relations in the Middle East are extremely complex, involving multiple interests and conflicts, and Iraq is located in the heart of the Middle East, close to key countries such as Iran, Syria, and Saudi Arabia. As the current situation between Palestine and Israel continues to deteriorate and become unstable, no one can be sure whether such a situation will have an impact on the safety of Chinese personnel and assets. Therefore, in the negotiations with Iraq, the Chinese side must have mentioned the issue of security.
The Iraqi side has also responded to China's concerns. Iraqi Prime Minister Al-Sudani said that Iraq is working to end the presence of the international coalition in Iraq. This international coalition is a multi-tasking group led by the United States that invaded Iraq in 2003 and overthrew Saddam Hussein's regime. While the alliance was designed to help Iraq remove threats and maintain security and stability, it has in fact fuelled violence and instability for a number of reasons, including strategic mistakes, lack of cultural sensitivity and poor governance. For example, the coalition failed to effectively manage tensions between different religious and ethnic groups in Iraq, which was further exacerbated after Saddam Hussein's overthrow. In addition, some of the coalition's military operations have led to Iraqi civilians**, infrastructure destruction and economic decline, with negative effects throughout the Middle East.
Ending the presence of the international coalition in Iraq has substantially eased tensions within the country and reduced the likelihood of external intervention triggering a military conflict. After that, Iraq's security forces and ** will assume greater responsibility for maintaining stability, which will not only help Chinese enterprises continue to operate steadily in the local area, but also provide additional guarantees for the safety of Chinese personnel and assets. Against this background, a solid foundation has been laid for further deepening cooperation between China and Iran.
In short, it is of great strategic significance for China to become the largest holder of Iraq's oil fields, which will not only help ensure China's energy demand and enhance energy security, but also increase China's voice and profit margins in the first chain, strengthen economic ties and business exchanges with Middle Eastern countries, and exert greater influence in the global energy field. However, in economic cooperation with politically unstable countries such as Iraq, security is the biggest concern. China must strengthen cooperation with local security forces and develop effective security measures to ensure the safety of Chinese companies and personnel.