Monday, January 5, 2026

China competes with the West for Iraqi oil production (now just behind Shell/BP and TotalEnergies)

 TotalEnergies announced a $27 billion project in 2023, and BP is expected to spend up to $25 billion to redevelop four Kirkuk fields...Chinese oil companies have invested billions in Iraq, with total direct investments reaching over $34 billion by 2023,....

 Exxonmobil and Shell scaled back in Iraq....

 ExxonMobil and Shell scaled back in Iraq primarily due to unattractive fixed-fee Technical Service Contracts (TSCs), which offered low profit margins compared to the huge investment needed, compounded by political instability, security risks, bureaucracy, corruption, and delayed payments,

AI continues with this incorrect claim: 

 Shell also cited corporate restructuring after its BG Group acquisition, focusing on gas, as a reason for its withdrawal from some projects. 

Shell has a very large and significant U.S. subsidiary,
Shell USA, Inc., based in Houston, Texas, making it a major player in the American energy market
Key Reasons for Scaling Back:
  • Unfavorable Contracts: Initial TSCs paid companies fixed fees per barrel, limiting upside and making projects less profitable than desired, especially compared to new revenue-sharing models introduced later.
  • Low Profitability: Companies felt returns were insufficient, with one report noting ExxonMobil's Iraqi profits were under $100M annually, considered weak for the investment.
  • Security & Political Risks: Security threats from militias and clans, alongside volatile political environments, added costs (like "protection" fees) and risks, leading to evacuations.
  • Corruption & Bureaucracy: Allegations of demands for "commission" payments (bribery) and bureaucratic hurdles increased operating costs and trust issues with the government.
  • Financial Issues: Iraq's financial crises, like the 2016 oil price collapse, led to delayed payments to foreign firms, further straining relations.
  • Corporate Strategy (Shell): Post-BG Group acquisition, Shell focused on gas and large asset disposals, leading them to exit some Iraqi oil fields like Majnoon and West Qurna-1. 
  •   mid-2025 about a potential takeover of BP by Shell, which Shell officially denied, stating no such talks were occurring, although rumors resurfaced later, linking new BP leadership to potential deal talks, but ultimately no acquisition happened, and both companies remain independent. https://www.forbes.com/sites/timtreadgold/2025/12/18/bp-merger-with-shell-edges-closer-with-oneills-appointment/
  •  The focus on “green” energy has seen BP and Shell shares underperform U.S. rivals such as Chevron and ExxonMobil which have stuck more closely to their core business of oil and gas production.

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