Preliminary estimates suggested that Iraq’s Eridu oil field holds between 7-10 billion barrels of reserves. Senior Russian oil industry sources spoken to exclusively by OilPrice.com last week said the true figure may well be 50 percent more than the higher figure of that band. In either event, the Eridu field – part of Iraq’s Block 10 exploration and development region – is the biggest oil find in Iraq in the last 20 years, and Russia wants to control all of it, alongside its chief geopolitical ally, China. This is in line with Moscow and Beijing’s objective of keeping the West out of energy deals in Iraq to keep Baghdad closer to the new Iran-Saudi axis and to “end [the] Western hegemony in the Middle East [that] will become the decisive chapter in the West’s final demise,” as exclusively related to OilPrice.com. The approval last week by Iraq’s Oil Ministry for Inpex – the major oil company of key U.S. ally Japan – to sell its 40 percent stake in the Block 10 region that contains the huge Eridu discovery leaves the way clear for Lukoil to take total control of the entire oil-rich area.
Lukoil had held a 60 percent stake in the entirety of Block 10, with the remainder held by the Japanese firm. However, from March it has been looking for ways to push Inpex out of the Block, and with it the last remnants of Western influence in the area. March saw Iraq’s state-owned Dhi Qar Oil Company (DQOC) formally approve the development of Block 10’s reserves, including for the whole Eridu field. Block 10 lies in the southeast of Iraq, approximately 120 km west of the key oil export route from Basra, and just south of the huge oil fields in and around Nassirya. The contract for Block 10 awarded to Lukoil and Inpex back in 2012 in Iraq’s fourth licensing round gives a relatively high remuneration per barrel rate of US$5.99, although at that point the vast Eridu field had not been discovered. In 2021, after some preliminary testing, Iraq’s Oil Ministry said it expected peak production of at minimum 250,000 barrels per day (bpd) from Eridu by, at that point, 2027. The senior Russian oil industry sources exclusively spoken to by OilPrice.com last week, believe peak production could run at least 100,000 bpd higher than the previous figure, contingent on whether the new reserves estimates are correct, although given delays in development since 2021, the date at which that will be achieved is now toward the end of 2029. Related: Why Gasoline Prices Fall Almost Every Year Between August and November
Back in 2021 – at least before the U.S. formally withdrew from Iraq by ending its ‘combat mission’ there at the end of December – it was clear that Washington knew what Russia and China were up to long term in the country, and how the U.S. was being manipulated by Iraq. In a moment of insight, the then-U.S. Deputy Assistant Secretary of Defense, Dana Stroul, said: “It’s […] clear that certain countries and partners would want to hedge and test what more they might be able to get from the United States by testing the waters of deeper co-operation with the Chinese or the Russians, particularly in the security and military space.” This view could equally have been aimed, not just at Iraq, but also at most other countries in the Middle East at that time – most notably Saudi Arabia, and the UAE. That said, this profound insight had no effect on Washington at that point, and posed no impediment at all to either Russia or China’s continued drive to entirely push the U.S. out of the Middle East, as analysed in depth in in my new book on the new global oil market order.
For Iraq, the endgame has been apparent from Russia’s effective takeover of the oil and gas industry of the country’s troublesome semi-autonomous region of Kurdistan in the north. This occurred in the chaos that followed the brutal put-down of the region after 93 percent of its inhabitants voted for full independence from Iraq in September 2017. Russian control over Iraqi Kurdistan was secured via the state’s corporate proxy, Rosneft, through three means, as also analysed in full in my new book. Subsequent to this, Russia has manipulated the region into such a toxic standoff with the central Iraq government in Baghdad that the final stage of the plan to effectively incorporate the Iraqi Kurdistan region into the rest of Iraq, is now proceeding at full throttle. Given this, Russia and China are now moving to secure their dominance over the rest of Iraq, with the removal of Inpex from the vast Eridu field being only the latest example of their broader strategy at work.
Multiple field exploration and development deals, plus countless lower-profile ‘contract-only’ agreements, with Russian and Chinese…