China is pursuing its long-term plan to become an “independent” country in the world. This objective is clear in the dual circulation strategy (dual circulation) with which they aim to isolate the domestic market from the rest of the world, thereby reducing dependence on foreign markets, especially with regard to critical technologies. This plan, however, has a weak point: oil. Beijing can produce virtually anything: from clothing to advanced chips, but oil is another matter. Although the “Asian giant” is one of the largest crude oil producers in the world, it must import more than 11 million barrels of crude oil every day to “feed” its vast economy. To try to resolve this deficiency which cannot be filled with Chinese oil, The country’s state-owned companies clearly engage in foreign oil fields through direct investments. The oil won’t be Chinese, but at least it will be explored, drilled and extracted by Chinese companies.
Even if China is making one of the world’s biggest bets on renewable energies (covering deserts with solar panels, creating gigantic wind turbines, etc.), Beijing knows that oil will continue to play a key role for several years and that it will be essential to achieve this. a secure energy transition. Chinese company CNOOC admitted this summer that fossil fuels will be a stabilizing factor in global energy demand for the foreseeable future.
Thus, Chinese energy giant CNOOC signed an exploration, development and production contract (EDPC) with Iraqi national oil company Midland Oil Company to explore for oil and gas in the Block 7 field in this Middle Eastern countries. CNOOC Africa Holding, the wholly-owned unit of the Chinese state-owned oil and gas company, will own 100% of the shares and will act as operator of Block 7 of 6,300 square kilometerslocated in Diwaniyah province, central Iraq, according to the agency Reuters.
This site is like a “jack-in-the-box”
Although the information on the estimated crude oil reserves of this block is still confidential (if CNOOC has an estimate) and not very accurate, the Chinese company showed its enthusiasm and joy with the granting of this license, which suggests the possible potential of this block. “piece” of land. Executives of the Chinese company admitted that the goal was to make a major oil discovery as drilling and research progressed.
These 6,300 square kilometers extend over the provinces of Diwaniyah, Babylon, Najaf, Wasit and Muthanna in central and southern Iraq. The development is part of China’s efforts to increase its energy independence from the world and Iraq’s efforts to increase its oil production and attract foreign investment to extract its vast hydrocarbon reserves. Part of the pie will go to Iraq through taxes and state-owned enterprises.
The agreement formalizes CNOOC wins block exploration bidas part of Iraq’s recent licensing round in which Baghdad offered to share profits with partners in lieu of previous technical services contracts, in a historic policy shift. Zhou Xinhuai, executive director of CNOOC, after obtaining the license, admitted that the hopes placed in this block are high, words which came, obviously, after closing the license.
Block 7 in Iraq could end with a huge new discoveryalthough the company will first need sufficient valuations to understand its reserve potential, says Zhou. “CNOOC will maintain our high standards in selecting new assets globally,” Zhou said.
Three years to drill the land
Although the Chinese firm has already been able to carry out its scientific and geological investigations, it is now time to confirm that there are significant quantities of crude oil underneath. Under contract, the first stage of the exploration period will last three years, without specifying when it will begin. CNOOC is one of the leading international oil producing companies in Iraq, with operations focused on the Maysan field in the southeast of the country.
Iraq has one of the world’s largest proven oil reserves, estimated at around 145 billion barrels, according to data from OPEC and the Iraqi Oil Ministry. This figure makes Iraq the fifth country with the largest proven reserves, behind countries like Venezuela, Saudi Arabia and Canada (if we take into account its tar sands). However, the country’s production potential has not been fully exploited due to several challenges, including limited infrastructure, internal conflicts and lack of investment in advanced technologies. With China’s help, Iraq will be able to develop its potential and Beijing will gain greater independence.
On the other hand, CNOOOC aims to pump 700 to 720 million barrels of oil equivalent by 2024or between 3% and 6% above last year’s level, CNOOC officials said on a conference call after posting record interim profit. CNOOC expects domestic natural gas production to maintain strong growth until 2030 and is ready to monetize Guyana’s vast oil and gas resources, its CEO Zhou Xinhuai said at a conference.
