[The contract, the renegotiation of a deal first signed in 1996 with the government of Saddam Hussein, was postponed after the United Nations imposed economic sanctions on Iraq and the American military toppled Mr. Hussein in 2003. Analysts say the Ahdab operation is China National Petroleum’s largest in the Middle East]
By Edward Wong
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| A China National Petroleum Corporation engineer working at Iraq’s Al Ahdab oil field. |
BEIJING — China’s largest oil company has begun operations at Al-Ahdab oil field in Iraq, making the field the first major new area to start production in Iraq in 20 years, according to an official news report on Tuesday.
Operations began June 21, and the field is expected to produce three million tons of crude oil per year, reported China Daily, an official English-language newspaper. The oil field was discovered in 1979 and is believed to contain a billion barrels of crude.
The Chinese company, the China National Petroleum Corporation, a state-owned enterprise, secured rights to the field under a technical services contract signed with the Iraqi government in November 2008. Under the contract, the company has development rights for 23 years, China Daily reported. It is investing $3 billion.
The contract, the renegotiation of a deal first signed in 1996 with the government of Saddam Hussein, was postponed after the United Nations imposed economic sanctions on Iraq and the American military toppled Mr. Hussein in 2003. Analysts say the Ahdab operation is China National Petroleum’s largest in the Middle East.
The contract stipulates that the company receive a fee for every barrel of oil produced, rather than an equity interest in the oil field, as it would have under the original agreement with Mr. Hussein’s government. A Chinese oil executive said in 2009 that the company would make a profit of less than one percent, but that the contract was a way to “get a foot in the door” of the Iraqi oil industry, which has much larger fields than Ahdab.
The deal began drawing intense criticism from residents and officials in Wasit Province, where the field is located, shortly after the contract was signed. Some people demanded that Wasit be granted a royalty of $1 a barrel to improve access to clean water, health services, schools, roads and other public needs in the province, which is among Iraq’s poorest. The Iraqi government rejected the demands.
Local residents complained in 2009 that Chinese development of the field would have no benefits for them, other than providing several hundred people with jobs as laborers and security guards for less than $600 a month. At the time, China National Petroleum said it was in an exploration phase and did not need much labor. Now, with the start of production, it is unclear whether the company has hired more residents. At the time, the 100 Chinese workers at the compound were too scared to leave the area for fear of being kidnapped.
The Ahdab field’s estimated reserves are small by Iraq’s standards. The Rumaila field near the southern city of Basra, for which China National Petroleum and BP signed a development deal in June 2009, is Iraq’s largest oil field, with an estimated 17.8 billion barrels. Iraq as a whole is estimated to have reserves of more than 100 billion barrels.
China’s energy needs have soared, and it has been scouring the world for energy sources. On Tuesday, President Omar Hassan al-Bashir of Sudan, in which China has large oil interests, arrived in Beijing for talks with Chinese leaders. Mr. Bashir faces indictment by the International Criminal Court on war crimes and genocide charges, but China is not obligated to arrest him because it is not a signatory to the Rome Statute that established the court. He is scheduled to meet President Hu Jintao on Wednesday.
@ The New York Times
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@ The New York Times
COMMENT(S)
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From: Mukund Apte
Date: Wed, Jun 29, 2011 at 8:19 AM
Subject: Re: CHINA OPENS OIL FIELD IN IRAQ
Wherever USA cannot progress for want of MONEY, China will try and reach there for benefits. And now USA is economically (by its own KARM) hurt very badly, what else can we see? But note that Chinese advance also will not continue for long.
Prof. Mukund Apte,
Date: Wed, Jun 29, 2011 at 8:19 AM
Subject: Re: CHINA OPENS OIL FIELD IN IRAQ
Wherever USA cannot progress for want of MONEY, China will try and reach there for benefits. And now USA is economically (by its own KARM) hurt very badly, what else can we see? But note that Chinese advance also will not continue for long.
Prof. Mukund Apte,
Mumbai, India.
CHINESE LEADER'S VISIT TO GERMANY ENDS WITH LARGE TRADE DEALS
[The deals, announced during a signing ceremony in the Chancellery here, signaled a major shift in German-Chinese relations as China tries to modernize its economy and Germany seeks more markets for its high-technology goods.]
By Judy Dempsey
The deals, announced during a signing ceremony in the Chancellery here, signaled a major shift in German-Chinese relations as China tries to modernize its economy and Germany seeks more markets for its high-technology goods.
Germany and China agreed to establish special government consultations, which means representatives of the two countries will meet regularly and will discuss a wide range of topics, like trade, investment, education, environment, human rights, security and the rule of law. “A new chapter has been built,” Chancellor Angela Merkel of Germany said during a news conference with her Chinese counterpart.
Mrs. Merkel’s decision to meet the Dalai Lama, the exiled spiritual leader of Tibet, in 2007 provoked sharp criticism from the Chinese leadership and the threat that German companies would lose out on lucrative contracts as a result of that meeting — also held in the Chancellery.
While no contracts were canceled, Mrs. Merkel has in the meantime given far more attention to trade and economic ties with China as Germany has ridden out the global financial crisis. Germany is Europe’s strongest economy, with one of the bloc’s lowest unemployment rates, because of its export-driven economy and more flexible labor force.
Earlier Tuesday, Mrs. Merkel said bilateral trade with China could increase to €200 billion, or $285 billion, by 2015 as the two countries “significantly deepen” their ties. Trade between the two countries amounted to €130 billion last year, an increase of 34 percent from 2009, according to the Federation of German Industry.
Mr. Wen said that trade between Germany and China could double within five years. Mrs. Merkel and Mr. Wen spoke at a Chinese-German business forum. The entourage Mr. Wen took with him to Hungary and Britain, earlier in his European visit, paled in comparison to the delegation in Germany: 13 ministers and more than 300 managers.
He called for “mutual respect” for the different historical and cultural backgrounds of China, Germany and the European Union.
“China respects the European political system,” Mr. Wen told the business forum. “On the other hand, we expect respect for China’s system and China’s territorial integrity.”
Mrs. Merkel, who spent more than four hours in talks with Mr. Wen on Monday evening in a government lakeside villa in south Berlin, gave him the full red carpet treatment, including military honors Tuesday morning.
Accompanied by almost all of the German cabinet, Mrs. Merkel began her government’s consultations with China.
China overtook Germany as the world’s biggest exporter in 2009. China is Germany’s third-biggest trading partner, after France and the Netherlands and ahead of the United States.
“We both take the view that what is good can become better,” Mrs. Merkel said at the business forum. She added that China and Germany were “ideal partners” to developelectric cars, for example, and said both countries wanted to “deepen our investment relationship.”
Despite the bonhomie of the public meetings and the trade and investment deals won by German companies, Mrs. Merkel, on behalf of German industry, raised several sensitive issues with Mr. Wen.
One was technology transfer, in which Chinese companies dismantle a machine, copy it and manufacture it. “This is a big issue,” said Friedolin Strack, director of the Asia unit of the Federation of German Industries.
Mrs. Merkel also brought up intellectual property rights.
German industry, too, was critical of the way Chinese companies are subsidized in their international activities, especially in Eastern Europe. A recent study by the Committee on Eastern European Economic Relations, a lobby for German industry, criticized China for providing low-cost loans and subsidies to Chinese firms competing for contracts in Eastern Europe.
Mr. Wen, for his part, said Chinese companies wanted to invest much more in Germany. Direct German investments in China amount to €20 billion.
Chinese investments in Germany total €600 million, according to Germany Trade and Invest, an industry lobby.
