Iraq's Ministry of Oil on Dec. 30 signed an $8 billion agreement with China's state-owned Hualu Engineering & Technology [6] to oversee expansion of al-Faw Petrochemical Complex, allowing its refinery to process 300,000 barrels per day of crude. The expansion of al-Faw complex, along the strategic Shatt al-Arab waterway in Basra governorate, is the largest yet undertaken in the Iraqi energy sector, and is seen as facilitating a new thrust of output by the country's oil industry. The deal is a "build-own-operate transfer" (BOOT), which means Hualu could gain effective control of the facility. Hualu is majority-controlled by the giant China National Chemical Engineering Company (CNCEC [7]). (IraqiNews.com [9], MENAFN [10], Argus [11])
The deal follows a series of contracts finalized last month for two Chinese companies, PowerChina [12] and Sinotech [13], to build 1,000 schools across Iraq. No value was given for the deals, but in 2019 China agreed to undertake a wide range of construction projects in Iraq in exchange for 100,000 barrels of oil. (Global Construction Review [14])
Earlier last year, China reached deals to build an airport in Nasiriyah, some 1,000 healthcare facilities across the country, a sewage treatment plant in Baghdad, and nearly 90,000 new homes in the Baghdad district of Sadr City—all in return for oil. (GCR [15])
Last January, Iraq won an up-front $2 billion infusion [16] from state-owned ZhenHua Oil Co [17], subsidiary of the China North Industries Group Corp (Norinco [18]). The deal marked the first in which Iraq was offered pre-payment for crude, with oil effectively used as security for a loan.
