When China’s Zhenhua Oil finalized an agreement to develop Iraq’s huge 8bn barrel East Baghdad field in May 2018, it marked a major step forward for the state firm (MEES, 25 May 2018). Zhenhua was already present in Iraq, but only as a minority partner (37.5%) at the 140,000 b/d Adhab field operated by its larger cousin CNPC. The East Baghdad agreement marked Zhenhua’s step forward as a potentially key player in Iraq’s upstream.
Although production at East Baghdad was only 10,000 b/d of heavy (20-24°API) crude, the field has long been seen as a sleeping giant. Zhenhua was mandated to awaken it, starting with an increase to 40,000 b/d by 2023. While Zhenhua has made some progress, it is no easy task and new investment restrictions from Baghdad are only making it harder. (CONTINUED - 530 WORDS)