Iraq’s oil pivot: Balancing Beijing’s muscle and Washington’s comeback

Shafaq News

Iraq’s reliance on foreign operators to sustain its oil industry is deepening, with Chinese companies now entrenched across many of the country’s largest fields and American firms re-entering through a new wave of high-profile deals. This shift has placed Iraq’s most strategic resource at the center of a quiet competition between Beijing and Washington—one that, according to experts, is shaping government decisions in ways that are “purely political.”

Oil expert Hamza al-Jawaheri told Shafaq News that Baghdad’s recent exclusive invitation to US companies to develop the West Qurna-2 field—discovered in 1973 and long regarded as one of Iraq’s most valuable assets—in Basra aims to counterbalance China’s expanding reach. He explained that the government seeks to reassure Washington that it “is not being marginalized,” particularly as Chinese operators have secured the dominant share of Iraq’s producing fields.

Any American involvement in West Qurna-2, he added, would remain within Iraq’s technical-service model, without granting companies a stake in production.

The invitation followed Russia’s Lukoil declaring force majeure on its 75 percent stake after sanctions disrupted its operations.

China’s Expanding Footprint

Chinese companies have become central to Iraq’s upstream sector, operating or co-developing fields from Wasit to Basra. CNPC and its subsidiary PetroChina hold positions in Ahdab, Halfaya, Rumaila, and West Qurna-1. Sinopec, Geo-Jade, Zhenhua Oil, United Energy Group, and Zhongman extend this footprint across Mansuriyah, Sumer, Addan, Siba, Block 9, Sindbad, Fao, East Baghdad, the Middle Euphrates, and other blocs.

Their presence has recently deepened through substantial investments. A Geo-Jade–led consortium in 2025 committed $848 million to expand the Tuba field and construct a 200,000-barrel-per-day refinery, a petrochemical complex, and two power plants. Zhenhua Oil plans to double its production to 250,000 bpd by 2030, while Zhongman allocated $481 million to develop blocks won in 2024.

A Renewed American Push

After years of limited participation, American companies are returning to Iraq’s oil sector through a series of strategic agreements. ExxonMobil signed an accord in October 2025 to develop the Majnoon field and improve export-infrastructure from Basra.

In August, Iraq reached an agreement in principle with Chevron covering exploration blocks and producing fields under the broader Nassiriya project. HKN Energy concluded an initial deal with the North Oil Company in July to develop the Hamrin field, and engineering firm KBR secured a renewed contract for project management services at Majnoon.

Analysts attribute this renewed interest to Iraq’s combination of low extraction costs, large reserves, and the scale required by companies facing production declines elsewhere. Executives from smaller Chinese firms, meanwhile, point to improved investment conditions and policy coordination that have made Iraq more attractive to both Asian and Western operators.

A Sector Built on Foreign Partnerships

Iraq, OPEC's second-largest producer, aims to raise its production capacity by more than 50 percent—surpassing six million barrels per day by 2029. Achieving this goal depends on sustained foreign involvement, with recent assessments emphasizing that approximately 70 percent of Iraq’s production relies on foreign operators, reflecting a structural reliance that is deepening rather than receding.

In this context, Baghdad’s overture to American firms at West Qurna-2 signals an attempt to balance partnerships without disrupting existing Chinese-led development. The government views both relationships as essential: Chinese companies provide low-cost, large-scale project delivery, while American firms offer advanced technology, export-infrastructure expertise, and a channel of strategic engagement with Washington.

As Iraq prepares to select a new operator for West Qurna-2, the decision is likely to shape the distribution of influence between China and the United States across the wider sector.

Written and edited by Shafaq News staff.