Iraqi Prime Minister seeks large energy investment on US visit

Zaidi Bets on US Companies to Stimulate Energy Sector

The Iran War has caused a major economic blow to Iraq

Zaidi to meet Trump for possible deals

Written by?Ahmed Rasheed & Muayad Haeed

BAGHDAD (July 13) - Iraqi Prime Minister Ali al-Zaidi hopes to secure significant U.S. investments in his country's energy, oil, and gas sectors, during a trip to the White House, this week. The Iran War has impacted crude production and the state finances.

Analysts say that Iraq's government has a growing focus on diversifying international relationships to better deal with regional instability. This agenda is expected to be a major part of the visit from July 13 to 18th.

This is one of the most direct attempts to date to attract major U.S. investments into a sector that has long been dominated by Chinese and Russian firms. Iraqi officials, however, reject any suggestion Baghdad was distancing themselves from their close ally Tehran for closer ties with Washington.

Ahmed Younis, a political analyst based in Baghdad, said that the Iran war marked a turning-point. It highlighted the dangers of relying too heavily on a single partner in the region.

He said that "Zaidi believes energy is the fastest way to deepen cooperation with Washington."

According to Iraqi officials and U.S. government officials, the effort involves negotiations with Chevron on major upstream projects; support for U.S. backed power and liquefied gas ventures;?security assurances for American operators operating in Iraq's semiautonomous Kurdistan Region, and revived export pipeline plans linking Iraq to Mediterranean markets. Zaidi’s cabinet has approved a number of initiatives, including an agreement with HKN Energy, based in the United States, to develop the Himreen Oilfield in northern Iraq. The government also authorized the Electricity Ministry, which is responsible for negotiating a comprehensive agreement with General Electric to expand Iraq's transmission and generation infrastructure.

Zaidi stated that the government planned to increase oil production "significantly" within three years. This was according to a press release from his office.

The remarks were made during a Washington meeting with Iraqi Christian businesspeople, who he encouraged to invest in education, healthcare, and petroleum products. These deals will be the focus of a discussion between Zaidi, an Iraqi multimillionaire, who was appointed in May, as well as Donald Trump, U.S. president, who has given Zaidi strong support.

Zaidi stated in a press release issued before the trip that "we have instructed the Ministries of Oil and Electricity to give priority in their procurement to American companies with reputable track records in the fields of energy, technology, and telecommunications."

Focus on U.S. Companies vs. Chinese, Russian and European companies

Analysts say it will be difficult to attract enough investment for the development of oilfields, and fixing infrastructure bottlenecks which have prevented sustained increases in production.

A document that was seen by showed that the Iraqi Cabinet instructed the Basra Oil Company, the state-run oil company in Iraq, to exempt U.S. companies involved in energy project discussions from certain regulatory requirements relating to preliminary agreements in early June.

Mohammed Abbas is an energy consultant and former manager of the Basra Oil Company, which is run by the state.

"Zaidi uses Iraq's oil sector to strengthen relations with Washington, and to change the perception of some U.S. major energy companies that Iraq is not a conducive environment for large-scale investments."

Four Iraqi oil officials who are familiar with the discussions with U.S. companies, including Chevron and ExxonMobil -- as well as?HKN -- have said that the move underscores Baghdad's broader efforts to deepen its economic cooperation with the United States.

Iraq is attempting to reach out as it faces the same challenge as many other oil-producing countries: attracting investors and increasing production while remaining constrained by OPEC+ producer's group output limits.

Iraq has some of the largest crude oil reserves in the world, but long-standing production restrictions have made it difficult to increase revenues to support an ever-growing population. Iraq's strategy has been shaped by its negotiations with Chevron. Chevron began exclusive talks with Iraq earlier this year over the West Qurna-2 Oilfield after Baghdad replaced Russia's Lukoil, the?operator. This could have given the U.S. firm control over one of Iraq's largest and most productive assets.

Iraqi legislators and analysts have indicated that the energy initiatives of the government are meant to signal Washington that Iraq has become a more attractive location for international investment following years of'security concerns, bureaucratic obstacles, and legal disputes.

The security situation has significantly improved since the defeat of Islamic State a decade back, but periodic drone attacks and tensions in the region continue to be a threat to energy infrastructure. Iraqi officials claim that security measures around oil installations have been strengthened since the Iran conflict. Additional measures are also being taken to reassure foreign energy companies.

"Prime Minister Zaidi is a businessman and knows that winning over American companies to invest in Iraq, especially with the fragile security situation in the region, is not an easy task," said Murad ISMAEL, a member of Iraq's oil and gas parliamentary committee. (Reporting and editing by Michael Georgy and Aidan Lewis; Additional reporting by Enas Alashray; and Lincoln Feast.

(source: Reuters)