Democrats get good deal for China on Iraq oil
Iraq and China signed a $3 billion deal this week to develop a large Iraqi oil field, the first major commercial oil contract here with a foreign company since the 2003 U.S.-led invasion.One of the chief rumor mongers was Democrat Sen. Chuck Schumer. He and other Democrats were insistent that American firms not be seen to benefit from Iraq's oil business. I am sure the Chinese appreciate his efforts. I would rather the Americans have the business than the PR myself.
The 20-year agreement calls for the state-owned China National Petroleum Corp. to begin producing 25,000 barrels of oil a day and gradually increase the output to 125,000 a day, said Asim Jihad, a spokesman for the Iraqi Oil Ministry.
The contract revamps a deal the Chinese company had reached with Saddam Hussein in 1997 to develop the Ahdab oil field in Wasit province, south of Baghdad near the border with Iran. Unlike that deal, which called for China to share in the revenue, the current contract is based on a fixed-fee structure.
Western oil companies came close this summer to reaching agreements with the ministry to return to Iraq. Those smaller technical service contracts involved giving advice on how to boost production. The China deal is a service contract, which is more lucrative and involves large-scale development of the field.
Jihad said the technical service contracts, which were to be finalized June 30, have been delayed as negotiations continue with the Western concerns, including Shell, BP and Exxon Mobil. Most of the major oil contracts are to be awarded in the next 1 1/2 years through a process involving 35 companies identified by the Oil Ministry, he said.
Jihad said Iraqi officials hope the deal with China "will refute all the rumors that say the American companies are the only ones benefiting from the American occupation."