Russia is taking control of the largest oil discovery in Iraq in 20 years

Russia controls the largest oil discovery in Iraq during the past two decades, which is located in the Kirkuk region and could enhance Russia’s position in the global oil industry.

According to The Oil Price website, the preliminary estimates indicate that the Iraqi Eridu oil field is rich with about 7 to 10 billion barrels of reserves.

According to sources in Russia, the real number may be 50% more than the upper number of this range.

Either way, the Eridu field – part of the exploration and development area in the Block 10 area in Iraq – is the largest oil discovery in Iraq in the past twenty years, and Russia wants to control it completely, along with its main geopolitical ally, China.

This is in line with Moscow and Beijing’s goal of keeping the West out of energy deals in Iraq to keep Baghdad closer to the new Iran-Saudi axis and to end Western hegemony in the Middle East that will become the decisive chapter in the West’s ultimate demise.

The Iraqi Oil Ministry’s approval last week for Inpex – the main oil company of Japan, a key US ally – to sell its 40% stake in the Block 10 area, which contains the huge Eridu discovery, leaves the way open for Russian Lukoil company to take full control of the oil-rich area.

The Oil Price website explained that Lukoil owned a 60% stake in the entire Area 10, while the Japanese company owned the remaining percentage.

Since March, it has been looking for ways to push Inpex out of the bloc and with it the last vestiges of Western influence in the region.

In March, the Iraqi state-owned Dhi Qar Oil Company officially agreed to develop Block 10 reserves, including the entire Eridu field.

Area No. 10 is located in southeastern Iraq, about 120 kilometers west of the main oil export route from Basra, and south of the huge oil fields in and around Nasiriyah.

The Oil Price website added that the Area 10 contract, which was awarded to Lukoil and Inpex in 2012 in the fourth licensing round in Iraq, set a relatively high price per barrel of 5.99 US dollars, although at that stage the huge Eridu field hadn’t been discovered.

In 2021, after some initial testing, the Iraqi Oil Ministry said it expects peak production to be no less than 250,000 barrels per day from Eridu by 2027.

According to estimates by high-ranking sources in the Russian oil industry, peak production could increase by at least 100 thousand barrels per day from the previous figure, and this depends on whether the estimates of new reserves are correct.

Despite the delay in development since 2021, the date on which the works will be completed is near the end of 2029.

Going back to 2021 — at least before the United States officially withdrew from Iraq — it was clear that Washington knew what Russia and China were planning long-term in the country, and how the United States was being manipulated by Iraq.

Dana Stroul, then US Deputy Assistant Secretary of Defense, stated, “It is clear that some countries and partners will want to hedge and test what they might be able to get from the United States by testing deeper cooperation with the Chinese or Russians, particularly in the security and military arena”.

These comments weren’t directed only at Iraq, but also at most other countries in the Middle East at that time, most notably the Kingdom of Saudi Arabia and the United Arab Emirates.

On the other hand, this deep vision had no impact on Washington at that stage, and didn’t constitute any obstacle at all to the continuing efforts of Russia or China to completely push the United States out of the Middle East, as analyzed in depth in my new book on the Middle East, “The System” The new global oil market.

For Iraq, the endgame was clear from Russia’s effective takeover of the oil and gas industry in the country’s semi-autonomous Kurdistan region in the north.

This occurred in the chaos that followed the brutal repression of the region after 93% of its population voted for full independence from Iraq in September 2017.

Russian control of Iraqi Kurdistan was secured through its state proxy, Rosneft, through three means.

Later, Russia manipulated the region and brought it into a toxic confrontation with the central Iraqi government in Baghdad, as the final phase of the plan to effectively integrate the Iraqi Kurdistan region into the rest of Iraq is now proceeding at full speed.

Given this, Russia and China are now moving to secure their dominance over the rest of Iraq, and the removal of Inpex from the massive Eridu field is just the latest example of their broader strategy at work.

The Oil Price website stated that multiple exploration and development deals for fields, in addition to countless less important contract-only agreements, with Russian and Chinese companies allow the two countries ample scope to benefit from these agreements in a more difficult geopolitical presence throughout the country, including within the main infrastructure fabric of its structure.

At a recent Iraqi Cabinet meeting, it was agreed that the country must now give its full support to the rollout of all aspects of the wide-ranging “Iraq-China Framework Agreement” signed in December 2021, but agreed in principle more than a year ago.

This agreement is very similar to the “25-Year Comprehensive Cooperation Agreement between Iran and China” in scope and size.

The main part of both deals is that China first rejects all oil, gas and petrochemical projects that will be put forward in Iraq for the duration of the deal, and that it is given a discount of at least 30% on all oil, gas and petrochemical projects that it purchases.

Another key part of the framework agreement between Iraq and China is to allow Beijing to build factories across the country, while also building supporting infrastructure.

This includes the railways, all of which are overseen by management staff from Chinese companies on the ground in Iraq.

Iraq’s railway infrastructure will be completed after the network in Iran, and this began in earnest in late 2020 with the contract to electrify the 900-kilometre main railway linking Tehran to the northeastern city of Mashhad.

As a catalyst for this, plans have been made to establish a high-speed train line between Tehran, Qom and Isfahan and to extend this developed network to the northwest via Tabriz.

Tabriz will be a focal point for the new 2,300-kilometer Silk Road that connects Urumqi (the capital of China’s Western Xinjiang province) to Tehran, and will connect Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, before reaching Europe via Türkiye.

These plans, in turn, are linked to the natural plans developed by Russia and China to transform the entire southeastern region of Iraq into an area where oil and gas, controlled by Russia and China, intersect.

One of these key deals was Baghdad’s approval of nearly a trillion Iraqi dinars (US$700 million) for infrastructure projects in the city of Zubayr, south of Basra.

The city’s governor at the time of the deal, Abbas al Saadi, said that China’s heavy participation in the projects was part of a broad-based oil for reconstruction and investment agreement.

Abbas al Saadi’s announcement came shortly after Baghdad awarded another large contract to another Chinese company to build a civilian airport to replace the military base in the capital of the oil-rich southern province of Dhi Qar.

The Dhi Qar region includes two of Iraq’s largest potential oil fields – al Gharraf and Nasiriyah, and China has said it intends to complete the airport by 2024.

This region is also located just north of the huge Eridu oil field and northwest of Basra.

The airport project will include the construction of several cargo terminals and roads linking the airport to the city center and, separately, to other major oil regions in southern Iraq.