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Iraq signs mega oil deal as US floats Iran trade waiver

May 8, 2019 at 12:28 pm

Prime Minister of Iraq Adil Abdul-Mahdi on 6 February 2019 [Twitter]

Iraq is set to sign a $53 billion oil deal with American company Exxon Mobil and Chinese firm PetroChina as the US floats waivers for Baghdad to deal economically with Iran.

Iraqi Prime Minister Adil Abdul-Mahdi today denied any links between the mega project – set to earn the country $400 billion over the next 30 years – and the US decision to grant waivers.

The $53 billion project will see infrastructure being built and increase the output of oilfields in the south of the country from 125,000 barrels per day (bpd) to 500,000 bpd, Abdul-Mahdi said.

The deal guarantees that Exxon Mobil and PetroChina will repair and build new export pipes and construct a water injection project to feed oil wells in Nahr Bin Umar and Artawi in the south.

There are also plans to process 100 million standard cubic feet of natural gas per day from the same fields.

READ: Iraq to export 1m barrels of oil per day through Jordan

“Talks now between the oil ministry and Exxon Mobil and PetroChina are focused on how to split profits if oil prices rise or decline,” the prime minister told Reuters.

The Iranian ambassador was quoted saying on Monday that the US would grant waivers to Iraq, allowing it to deal with Iran economically, if it signed an oil deal with Washington.

Both Washington and Tehran, as Iraq’s closest allies, are pushing for influence in the country.

There has been an escalation in hostilities between Iran and the US since US President Donald Trump withdrew from the 2015 Nuclear Deal and reimposed sanctions on the Islamic Republic.

In April this year, the US refused to renew waivers for a number of countries – including India, China, and Turkey – who get a high percentage of their crude from Iran.

READ: On the American thirst for oil

The sanctions are only for countries importing crude oil and as Iraq doesn’t import any from its neighbour, the US has already granted them waivers, allowing them to import natural gas.   

The natural gas waivers “still stand,” an Iraqi oil official told Reuters.

News of the American and Chinese oil deal comes the day after US Secretary of State Mike Pompeo made an unannounced visit to Baghdad to meet the prime minister and other officials.

The purpose of the meeting was to brief Iraqi leaders on US security concerns over Iran.

“We talked to them about the importance of Iraq ensuring that it’s able to adequately protect Americans in their country,” Pompeo told reporters.

There was no mention of the oil deal in reports of Pompeo and Abdul Mahdi’s discussion.