Iraq said to be close to deal to increase oil sales to China

ERBIL (Kurdistan 24) – Iraq's state-owned company responsible for marketing its oil abroad, SOMO, is close to signing a contract with China’s government-run Zhenhua Oil Company to boost the Middle-Eastern nation's oil sales, multiple sources told Reuters on Tuesday.

Iraq is already the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) and the deal, if brought to fruition, would increase Iraq's market share in Asia, currently the world's largest oil consumer. Iraq already imports 60 percent of OPEC members’ oil sent abroad, approximately 3.8 million barrels per day (bpd).

“Zhenhua helped Iraq to penetrate the Chinese market and make more revenues for Iraq,” said a senior source familiar with discussions on the agreement, adding that a 50/50 proposed joint venture could be finalized in October or November of this year.

The deal was pending regulatory approvals, another source claimed without offering further details.

So far, it is unclear where the joint venture would be located, but the port city of Tianjin near Beijing and Singapore were under discussion, other sources familiar with the negotiations told Reuters.

The sources requested to remain anonymous as they were not authorized to discuss the deal with the press. Both Zhenhua and SOMO have declined to officially comment on any pending deals or negotiations to reach them.

Iraq plans to boost oil production to over 7.5 million bpd by 2024, Iraqi Oil Minister Jabar al-Luiabi previously announced, of which six million bpd of oil would be for export and 1.5 million bpd slated to meet domestic demand.

Editing by John J. Catherine