China’s oil investment in Iraq instead of Iran

According to Energy Press, the Chinese have gradually increased their presence in Iraq’s oil industry since two decades ago. Some reports show that the country has currently invested in 41 different projects in Iraq’s energy field, of which 31 are focused on oil, and in some projects, including large oil fields, they have taken the place of companies such as ExxonMobil of America.
The Chinese first started working with joint investments in the country’s oil industry projects, that is, they stood next to European and American companies, and then they started buying the shares of those companies in the country’s oil industry.
Recently, the presence of the Chinese in Iraq has become stronger, to the point where they have been active in oil exploration projects in this country. It was just a month ago that Reuters, citing the Chinese company CNOOC, announced that it had signed an exploration, development and production contract with the state-owned company “Midland Oil” for the exploration of oil and gas in Iraq’s “Block 7” field.
CNOOC has announced that the first phase of exploration will last three years. This company is one of the main international oil producing companies in Iraq, and its activities are concentrated in the Maysan field, in the southeast of Iraq.
But the Chinese are not present in Iran’s oil and gas projects. The reason is the US sanctions. The last presence of the Chinese in Iran’s oil industry projects dates back to Phase 11 of South Pars, when this country partnered with France’s Total to develop and exploit this field. However, after the United States withdrew from the JCPOA and Total left Iran, China’s CNPC also announced its withdrawal.
China has a 25-year contract with Iran since 1400. The contract was a political, strategic and economic agreement for investment in the oil, gas, petrochemical industry, military, security, cultural and judicial infrastructure. As the media announced at the time of signing this contract, the amount of investment was estimated to be 280 to 400 billion dollars, but now, after three years of signing this contract, at least in the oil industry sector, the Chinese have not invested in Iran’s oil and gas industry.
But the Chinese are very active in Iraq. They extract oil and sell it to America. The volume of trade between Iraq and China is estimated to be 50 billion dollars, including 14 billion dollars of exports from China to Iraq and 34 billion dollars from Iraq to China. Today, the reality is that the Chinese buy Iranian oil at a discount, they invest in China.
Selling oil and nothing else!
Despite close political relations and a 25-year contract with Iran, China is not willing to invest in Iran. This country is the single largest buyer of Iranian oil. The buyer who sometimes does not pay for the oil in dollars and exchanges with goods instead of money. In addition, the discounts for selling oil to China are also high. Discounts that even the country’s top officials don’t hide.
Unofficial sources say that the discounts are from 30% to 90 million dollars a year, a figure that “Jahansanat” cannot confirm, however, the existence of discounts is certain.
After the election of Trump as the next president of the United States, speculations about the continued sale of oil to China have also increased. Some predict that oil sales will probably decrease as the sanctions become more difficult. Some optimistic forecasts also indicate that Iran has introduced other ways of circumventing sanctions during more than a decade of oil embargo, and the intensification of sanctions has no effect on Iran’s oil sales.
The other side of the story is also important. If China stops or reduces the purchase of oil from Iran, it is also a possibility; A possibility that was recently discussed by Bloomberg. This American media claimed in a report that Landbridge Petrochemical Company bought a shipment of 2 million barrels of oil from West Africa instead of importing from Iran and Russia.
Bloomberg’s news is accompanied by the analysis that with Trump’s return, Chinese refineries will not cooperate with Iran for fear of sanctions. But there are a few things here that Bloomberg didn’t mention: First; Trump’s main priority is to contain China and hit the country’s energy security, and naturally, the Chinese do not have the motivation to go along with America, but the motivation to circumvent the sanctions.