Jiyad: Iraq, and the China-Iran Cooperation Program

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraq and the China-Iran Comprehensive Cooperation Program

The China-Iran Comprehensive Cooperation Program (CICCP) was signed on 27 March 2021; two days later the CICCP's direct impacts on Iraq began emerging and one of such impacts seems to benefits both Iraq and Iran!!

A few days ago I completed a detailed preliminary assessment of CICCP document. The assessment was written in Arabic entitled "China-Iran Comprehensive Cooperation Program: Tactically Important Strategically Impacting if Implemented", it was circulated widely and posted on many websites.

The assessment uses composite methodology of three researches approaches (Text analysis, SCOR (Strength, Challenges; Opportunities and Requirements) and facts/evidence based) and comprises an introduction, three parts and concluding remarks. Part one provide brief review of CICCP document structure: preamble, articles, annexes, effective date and term of the deal, coordinating and supervising authorities. Part two, provides detailed assessment of eight fundamental topics/ areas of cooperation, from the perspectives of the political economy of bilateral relations and geopolitical considerations. Part three provides the direct official reactions to CICCP from Iraq, USA, Arab Gulf States/Saudi Arabia and Russia.

The political economy perspectives are related to the following basic issues: The first relates to the nature of bilateral relations in terms of sovereign independence or dependency and hegemony; the second is whether the principle of "mutually beneficial" is also equitable; the third concerns the structuring of the Iranian economy on whether the deal will eventually deepens the dependence on the export of raw materials, oil and gas, or introduces the required and desirable structural changes horizontal, vertical and knowledge-based levels; and the fourth is about the financial and banking independence, monetary and currency issues pertaining to funding investments and trade exchange.

The geopolitical considerations were addressed at four levels, starting from the domestic (national for both countries), continental (Asian from China to Syria), regional (West Asia / Middle East) and international levels.

The assessment argues that the timing of signing and announcing CICCP is tactically motivated and important, while its proper and timely implementation could be a game-changer and thus strategically impacting; but, as usual, reality seldom coincides with expectations.

This brief intervention focuses on the direct current evidenced impacts on Iraq. Interested readers are kindly invited to read the Arabic version of my detailed initial assessment through the web-links mentioned at the end of this article.

In a remarkable speed and substance CICCP has already prompted both Iraq and the US to react!

First; after the current prime minister, Mustafa al-Kadhimi, denied, rather harshly, in a press conference on November 18, 2020, the existence of an Iraq-China agreement by saying, 'You know there is no China agreement, why are you promoting these lies?', he returned to authorize, on March 30 - that is, only three days after the signing of CICCP, "to start implementing the Chinese agreement"!!

While I do not find it necessary, now, to discuss what has happened between Iraq and China since the government of Haider al-Abadi, I find it useful to remember the statement by the Prime Minister's Financial Affairs Adviser, Dr. Modhir Muhammad Saleh, on March 29, 2021, that the "Iraq-China agreement" became effective on October 18, 2020, and then he affirmed the "cooperation framework agreement ... and the final accounting and oil annexes were signed on September 23, 2019." So why has not been published to this day any official document on this agreement / cooperation framework agreement, nor any of its annexes or memoranda of cooperation/ understanding related to it!!??

But there is a document at the Ministry of Finance entitled "Export Credit Insurance Cooperation Framework" between the China Export & Credit  Insurance Corporation and the Iraqi Ministry of Finance) dating back to May 11, 2018 (that is, before the date of the agreement signed by former Prime Minister Adel Abdul Mahdi) !!!!

It is worth mentioning that 2021 State Budget Law includes a few infrastructure projects worth 1.803 trillion Iraq Dinnar to be funded, presumably by the above mentioned 2018 framework; since there is no new framework agreement officially published by the Ministry of Finance, nor approved by the Council of Ministers, nor legislated by the House of Representatives/ the Parliament. Moreover, even if such agreement is ratified and activated it utilization will be differed to future state budget for 2022 or even 2023 because of the national election scheduled for October this year.

Apparently, CICCP was a wakeup call for the Iraqi government but it is in reality too late for 2021 budget funding.

But on the other hand, the Iraqi Premier rushed for quick visits to Saudi Arabia and the UAE, immediately after signing CICCP; is there a relationship between the two events? Time will only tell!!!!

Second, among direct reactions by the US administration and as far as Iraq is concerned relates to Iraq-Iran interests. Just two days after signing the CICCP the U.S. renewed and extended the Iraqi exemption from the practices of maximum US pressure on Iran from 45 to 120 days; a waiver to avoid penalties for buying natural gas and electricity from Iran. This exception entails two positive consequences for both Iraq and Iran: the first is to ensure the continued supply of Iranian gas to generates electricity; this what the Iraqis suffer from its shortages especially the heated summer is on the doorstep, and the second is that Iraq pays Iran's accumulated dues for importing gas and electric power (which constitutes about a third Iraq's production of electricity) as the total of those receivables were mentioned in the 2021 budget, about 1688 billion Iraqi dinars.

Third, another important reaction by the US administration was its quick decision to hold a new round of strategic dialogue with Iraq; the discussions began on April 7, and mainly relate to the issue of US forces remaining in Iraq and the Strategic Framework Agreement signed in December 2008. (This agreement and related matters face strong opposition and many important, influential, legal and judicial challenges, especially after the Trump administration assassinated two leading heavy weight individuals, Abu Mahdi Al-Muhandis (Iraq) and General Qassem Soleimani (Iran), on January 3, 2021 near Baghdad airport).

It is worth noting that energy cooperation is one of the eight topics included in the said strategic framework agreement. Evidence suggests that the previous round of the Iraqi-American Committee for the Coordination of Cooperation in the Field of Energy, which was held, virtually remotely, on January 18 of this year was brief and did not include any important issues or noticeable impacts or new achievements. Hence, it did not attract attention from domestic or external media. Even the two ministries, i.e, Oil and Electricity, that should be directly involved, hardly mentioned anything on their websites on that latest meeting. Will CICCP invigorate Iraqi-American cooperation for the benefit of the energy sector in Iraq?? Who knows, will see!!!

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

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New Contracts for Iraqi Drilling Company (IDC)

By John Lee.

The Iraqi Drilling Company (IDC) has announced its intention to conclude contracts with Chinese and American companies operating in Iraq to drill and rehabilitate dozens of oil wells in the country.

The company indicated it is about to start drilling 20 wells in the Nasiriyah field in Dhi Qar, which are included in a long-term plan with the Dhi Qar Oil Company (DQOC) to advance the oil sector, due to be completed in over two years.

After the relative relaxation of the impacts of the coronavirus, the Iraqi Drilling Company resumed its negotiations with the international companies developing oil fields in the country and their counterparts affiliated with the Ministry of Oil in the provinces, in preparation for signing the postponed contracts with the aim of enhancing Iraq's energy capabilities.

The drilling and rehabilitation contracts, hoped to be concluded soon, include drilling 37 wells in the Zubair field for the Italian company ENI, the main operator of the field, and starting discussions with BP, the main contractor in the Rumaila field, to develop the giant field west of Basra.

This is in addition to the near signing of a contract to drill 43 wells in Majnoon field with the Basra Oil Company (BOC), which is the third largest oil field in the world, with reserves of 6.12 billion barrels.

The Iraqi Drilling Company has completed all its preparations to sign a contract with the Central Oil Company, to drill 27 wells in the East Baghdad field, and it continues its discussions with the Maysan [Missan] Oil Company (MOC) to sign a contract for drilling 22 wells in the Bazargan field as well as rehabilitating another 150 wells and a contract to operate a number of drilling towers and rehabilitation of a large number of wells in the Kirkuk fields with the North Oil Company (NOC).

(Source: Govt of Iraq)

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Cabinet Extends Contracts of KBR and Antonoil at Majnoon

By John Lee.

The Iraqi Cabinet has approved the renewal of two contracts at the Majnoon oil field.

Chinese company Anton Oilfield Services Group (Antonoil) is to continue to provide Integrated Field Management, while the American company KBR will provide Engineering, Procurement and Construction Management (EPCM).

The decision allows for the extension of the contracts for two more years, with an option to increase that to three years.

Both companies were awarded the contract by Basra Oil Company (BOC) in 2018, when BOC took over operations at Majnoon from Shell.

(Source: Office of the Prime Minister)

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Iraqi Govt approves purchase of Pfizer Vaccine

By John Lee.

The Iraqi Cabinet held its weekly meeting on Tuesday under the chairmanship of Prime Minister Mustafa Al-Kadhimi.

Following discussions, the Cabinet decided to approve the purchase the coronavirus vaccine from the US company Pfizer, on the basis of the manufacture and supply agreement between Pfizer Export BV and the Iraqi Ministry of Health.

(Source: Govt of Iraq)

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Iraqi Woman Sets Record, Calls Attention To Iraqi Children

Mais Abousy Sets Record as First Woman to Do Indoor Iron Distance Race, Calls Attention To Iraqi Children

Iraqi-American lawyer, Mais Abousy, set a record on Saturday, November 7, 2020, as the first known woman in the world to complete an indoor Iron Distance Race, using the feat to raise awareness of Iraq's orphans and vulnerable children.

Abousy's 140.6 mile indoor Iron Distance Race was a self-curated race at the St. James sports complex in the Washington, DC, area, featuring the theme "Suffer. Learn. Change."   The race is a precursor to Mais's anticipated 140.6 mile attempt in Iraq 2022.   The November 7th race - 2.4 mile swim, 112 mile bike ride, and 26.3 mile run - lasted 13 hours.

The race featured the US national anthem at the start and the Iraqi national anthem at the finish.  For the last mile of the race, she was joined by the State Department's Principal Deputy Assistant Secretary of State for the Near East Affairs Joey Hood and the Deputy Chief of Mission for the Embassy of Iraq in Washington DC M. H. Al-Fityan.

Mais was also joined for portions of the race by Iraqi-American brothers, Yaseen Eldadah (below left) who joined the swim and Elias Eldadah (also ICF Youth Liaison, D.C.) for the bike ride (below right) joined by their father, Dr. Zayd Eldadah.

Also joining Mais in the race was Dr. Nizar Hussein (swim), Haidar Al-Kindi (bike), and Zeena Rahman, President of Enabling Peace in Iraq Center (EPIC) (run).

Mais Abousy was featured in a Washington, DC WJLA ABC 7 TV news interview and in a pre-race article in the "Washingtonian" magazine where she shared more of her story.    Abousy has previously run several marathons and a triathlon to highlight the cause of Iraq's children.

The Iraqi Children Foundation (ICF) expresses its deepest gratitude to Mais Abousy for being a champion for Iraq's voiceless orphans and vulnerable children.

*    *   *

ICF intervenes with love and hope in the lives of children at risk of abuse, neglect, and exploitation by criminals, traffickers, and extremists.  ICF provides legal protection, psychosocial services, nutrition, and education to orphans, street kids, and other vulnerable children.  For more information or to donate, email liz@iraqichildren.org or visit  www.iraqichildren.org

(Source: ICF)

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China to Buy of Exxon’s stake in West Qurna?

By John Lee.

The China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC) are reportedly considering acquiring Exxon Mobil's remaining stake in Iraq's West Qurna 1 oilfield.

According to sources cited by Bloomberg, the stake could fetch more than $500 million.

ExxonMobil originally had a 60% stake in the field, but sold 25% to PetroChina and 10% to Pertamina in November 2013. (Shell originally had a 15% stake, but sold it to CIECO West Qurna Limited, a subsidiary of Japan's Itochu Corporation, in 2018 for $406 million.)

Itochu's website lists the current interests as: ExxonMobil (US (Lead Contractor), 32.7%; Petrochina (China) 32.7%; Itochu (Japan) 19.6%; Pertamina (Indonesia) 10.0%; Oil Exploration Company (Iraqi state-owned company) 5.0%.

More here.

(Source: Bloomberg)

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Caterpillar to take over Weir Oil and Gas

By John Lee.

Scottish engineering company Weir Group has announced the sale of its Oil & Gas division to US-based Caterpillar Inc.

The all-cash sale gives its Texas-based division an enterprise value of US$405m (£314m), subject to customary working capital and debt-like adjustments at closing.

The move is part of Weir's strategy to become a "premium mining technology pure play". 

Weir's Iraqi operations are managed from North Rumaila, where it provides mechanical and rotating equipment repairs and upgrades, oilfield and drilling equipment repair and certification, asset management and field services.

(Source: Weir)

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$8bn New Iraqi Energy Agreements with US Firms

The following commercial agreements worth as much as $8 billion were reached during a signing ceremony between U.S. energy companies and the Government of Iraq on August 19, 2020:

  • Honeywell and the Ministry of Oil agreed to advance the development of the Ar Ratawi [Artawi] gas project, which will further enable Iraq to capture, process, and utilize indigenous gas resources to meet domestic energy demand.
  • General Electric and the Ministry of Electricity committed to three agreements that will help increase reliable access to electricity in Iraq, including efforts related to GE's existing generation maintenance program, addition of combined cycle units at the Dhi Qar and Samawah power plants, and collaboration on strengthening Iraq's electricity grid and interconnection with neighboring countries.
  • Stellar Energy and the Ministry of Electricity concluded a front-end engineering and design agreement that will help advance deployment of turbine inlet air chilling technology on more than 30 turbines, which will increase power sector efficiency by as much as 30 percent.
  • Baker Hughes and the Ministry of Oil agreed to further collaboration on flare gas-to-power opportunities, and deployment of U.S. oil field services and equipment.
  • Chevron and the Iraqi Ministry of Oil outlined a framework for entering into exclusive negotiating on an exploration, development, and production contract in the Dhi Qar Province.

US Secretary of Energy Dan Brouillette (pictured) said:

"As two of the top oil producers in the world, the United States and Iraq share an appreciation for how energy shapes our economies and can strengthen our respective security.

"That is why I was thrilled to join Prime Minster Kadhimi, Minister Ismael, and Minister Hantoush today for an event featuring this prestigious Iraqi delegation and our great American energy companies. Together, we laid the groundwork for commercial partnerships worth up to $8 billion.

"These deals are key to Iraq's energy future, and I am confident that the same companies that have empowered the United States to become energy independent will deploy their deep expertise to help Iraq achieve its full potential in the energy sector."

(Source: US Dept of Energy)

US announces $204m Humanitarian Assistance for Iraq

On Wednesday in Washington, the United States announced nearly $204 million in additional humanitarian assistance for the people of Iraq, Iraqi refugees in the region, and to generous communities hosting them.

This funding includes nearly $133 million from the State Department's Bureau of Population, Refugees, and Migration and more than $71 million from USAID's Bureau for Humanitarian Assistance.

This funding brings the total for the U.S. humanitarian response for Iraq to more than $706 million since the beginning of Fiscal Year 2019. In addition, the United States has provided $49.5 million in COVID assistance in Iraq and more than $22.7 million to date in Fiscal Year 2020 to assist over 244,000 Syrian refugees in Iraq.

This assistance will provide critical shelter, essential healthcare, emergency food assistance, and water, sanitation, and hygiene services across Iraq. It will also improve access to civil documentation and legal services, the capacity of health care facilities and increase access to education and livelihoods opportunities.

The United States remains the largest single donor of humanitarian assistance in Iraq and globally, in line with our National Security Strategy. We appreciate all donors who have stepped up and continue to encourage both traditional and new donors to help meet growing needs.

(Source: US State Dept)