China Reaping Biggest Benefits of Iraq Oil Boom
The New York Times’ Tim Arango and Clifford Krauss report that, ten years after the U.S.-led invasion, China is buying up almost half of Iraq’s oil output, taking 1.5 million of a total 3.5 million barrels per day.
“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.”
[…] International energy experts said the Chinese had a competitive advantage over Western oil companies working in Iraq. They noted that the Chinese, unlike many Western oil companies, are willing to accept service contracts at a very low per barrel oil fee without the promise of rights to future reserves. While private oil companies need to list oil reserves on their books to satisfy investors demanding growth, the Chinese do not have to answer to shareholders.
The Chinese companies and their workers also win high marks for their technical expertise, as long as they are not working in complicated oil fields, like those in deep waters. “They offer a lot of capital and a willingness to get in quickly and with a high appetite for risk,” said Badhr Jafar, president of Crescent Petroleum, an independent oil and gas company based in the United Arab Emirates and a big gas producer in Iraq. He said the Chinese were vital to Iraq’s efforts to expand oil production, adding, “They don’t have to go through hoops to get people on the ground and working.” [Source]