Chinese independent oil companies are intensifying their activities in Iraq, aiming to double their production to 500,000 barrels per day (bpd) by 2030, according to a Reuters report.
This strategic move comes as some global majors have scaled back from these markets, which are traditionally dominated by China’s state-run entities.
Go deeper with GlobalData
The smaller Chinese producers, led by industry veterans, are drawn to Iraq by more attractive contract arrangements and the potential to leverage lower costs and faster project development.
Geo-Jade Petroleum, United Energy Group, Zhongman Petroleum and Natural Gas Group, and Anton Oilfield Services Group have secured half of Iraq’s exploration licences in recent rounds.
Currently, China’s CNPC is a major player, responsible for more than half of Iraq’s production at large oilfields such as Haifaya, Rumaila and West Qurna 1.
These companies are recognised for their rapid project execution, which appeals to the Iraqi Government.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataTheir increasing presence signifies a shift for Iraq, which is under pressure to expedite energy projects and has previously resisted increasing Chinese influence over its oilfields.
Furthermore, the agility and risk tolerance of these smaller companies allow them to develop oilfields in two to three years, significantly faster than Western counterparts.
Iraq’s improved political stability and investment climate are cited by executives as key factors in attracting both Chinese and Western companies.
The country is seeking to significantly boost its oil output, targeting more than six million barrels per day by 2029.
Iraq’s shift from fixed-fee agreements to profit-sharing contracts has been instrumental in attracting Chinese independents.
Geo-Jade Petroleum CEO Dai Xiaoping was quoted as saying: “Chinese independents have much lower management costs compared to Western firms and are also more competitive versus Chinese state-run players.”
Despite concerns over transparency and technical standards, the cost-effective approach of Chinese companies remains attractive to Iraq.
While some Western companies are making a comeback, with TotalEnergies and bp planning significant investments, the trend of Chinese operators’ expansion in Iraq’s oil sector is clear.
In May, a consortium spearheaded by Geo-Jade decided to fund the South Basra endeavour, encompassing the enhancement of the Tuba field in Iraq’s southern region to a capacity of 100,000bpd.
This included the construction of a refinery capable of processing 200,000bpd.
With an investment pledge of $848m (6.09bn yuan), Geo-Jade is set to rejuvenate production at the predominantly idle field, aiming to achieve production of 40,000bpd by mid-2027.
