China's Jereh Group has activated the contract for Iraq’s Mansuriya gas field.
China and Russia have divided roles in Iraq and Iran, with China taking a lead in southern Iraq and Mansuriya.
Mansuriyah is estimated to hold 4.5 trillion cubic feet of gas.
This is the text of the article titled Chinese Firm Moves Forward With This Strategically Critical Iraqi Gas Field by Simon Watkins.
The exploration and production (E&P) contract for Iraq’s second biggest gas field – Mansuriya – has now been activated by China’s Jereh Group, according to local news sources. In practical energy terms, the Mansuriya field holds an estimated 4.5 trillion standard cubic feet (Tscf) of gas and is expected to produce around 300 million scf per day (Mmscf/d) of gas at its peak, although it will start running at about 100 Mmscf/d within 18 months, a senior energy source who works closely with Iraq’s Oil Ministry told OilPrice.com. That said, the site has a deeper and broader appeal to China, with the Mansuriya field having long been regarded by it, the U.S., Russia and Iran as holding a vital strategic position in the heart of the Middle East.
The longstanding intention of several of Iraq’s recent governments has been to offer three of its key gas sites – Mansuriya, Siba, and Akkas – as one development package for a single country to split between its relevant oil and gas firms as it saw fit, in consultation with Iraq. An original front-runner was Turkey, which Baghdad saw as ideally placed as a bridge between West and East and also useful in its ability to help quell rising discontent at the time from Iraq’s semi-autonomous region of Kurdistan in the north. In turn, Turkey wanted Iraq’s help in dealing with Kurdish separatist activities on its own soil. It was Turkiye Petrolleri Anonim Ortakligi (TPAO) that signed the original development deal for Mansuriya back in 2011, promising Iraq’s Oil Ministry that it could be trusted to reach plateau production – then seen as 325 Mmscf/d -- within 10 years at most. This was not an unreasonable schedule, for which TPAO would be remunerated US$7.00-7.50 per barrel of oil equivalent, a relatively generous amount at that time compared to many of the previous awards from the Ministry. Unsurprisingly, given the rise of Islamic State shortly thereafter, TPAO suspended all operations on Mansuriya in 2014, but more surprisingly was its refusal to resume development work in September 2017 when asked to do so by then-oil minister, Jabar al-Luaibi.
In fact, a quiet agreement had been struck between Turkey and Russia that firms from the latter would take over the developments in Iraq, according to the Iraqi source. At around that time, Russia had effectively taken over the oil sector of Iraqi Kurdistan, as analysed in full in my latest book on the new global oil market order, and was keen to quickly leverage this into a similar presence in rest of Iraq. Securing major gas oil and contracts in the south of the country as well as the north would further allow Moscow to establish enormous political sway across the entire Shia crescent of power in the Middle East, stretching from Syria through Lebanon (by dint of Iran), Jordan, Iraq (also helped by Iran), Iran itself, and Yemen (via Iran). From this base, it could effectively challenge the U.S.’s then-vital oil, gas, and political ally in the region – Saudi Arabia. Helpfully for Russia in this context, TPAO had previously also signed a preliminary agreement for the Siba gas field back in 2011 and had been assured by the Iraqi government that an opportunity would become available to develop the Akkas gas field too. Consequently, in late 2017 Russia communicated to Iraq’s then-Oil Minister, Thamir Ghadhban, that Gazprom would be very interested in developing all three sites, the Iraq source told OilPrice.com.
However, before all this could be put into action, a new cooperation roadmap was agreed between Russia’s President Putin and his Chinese counterpart, Xi Jinping. This included effectively dividing up Iran and Iraq into areas of specific interest for each side, when also factoring in other countries in the region of long-term strategic interest to both sides. As Russia had already secured the northern Iraqi Kurdistan region, and was heavily present in Syria, among other regional operations, it was decided China would take the lead role in Iraq and a bigger role in Iran too. As a result, new all-encompassing co-operation agreements between China and Iraq (the 2019 ‘Oil for Reconstruction and Investment Agreement’, later expanded into the 2021 ‘Iraq-China Framework Agreement’) and then China and Iran (the 2020‘China-Iran Comprehensive Strategic Partnership Agreement’, as first revealed anywhere in the world in my 3 September 2019 article on the subject) were struck. In April 2021, the China Petroleum & Chemical Corporation (Sinopec) signed a 25-year deal with Iraq’s Oil Ministry to develop Mansuriya along the same 49 percent/51 percent split with the Iraqi state, although the agreement was finally cancelled due to lack of progress. The latest deal involving Jereh Group is an attempt by China to rectify that failure, given the strategic importance of the Mansuriya site.
In this context, it -- and the other two big gas fields, Akkas and Siba -- form a skewed triangle across southern Iraq, stretching from the eastern Iraqi border with Iran (the Mansuriya site), down south close to the key Iraqi Basra export hub (the Siba site), and then all the way west across to the Iraqi border with Syria (the Akkas site). Along the spine of this entire area running from east to west are the historical ultra-nationalist and ultra-anti-West cities of Falluja, Ramadi, Hit and Haditha and at the point geographically, Iraq turns into Syria. From there it is just a short hop to the key strategic ports of Banias and Tartus, and to Latakia – all three of which are crucial globally strategic sites for Moscow, as also detailed in my latest book on the new global oil market order. The Syrian port of Tartus remains a huge naval base for Russia and the only Mediterranean port to which it has access. The port is just a short ride from Khmeimim airport, which – under a deal struck in 2015 - became a dual-use civilian-military airport-airbase for use by Russia. And just a short flight away from those two key assets is Russia’s Latakia intelligence-gathering listening station.
For both Russia and Iran, the securing of the spine of Iraq running from the western border of Iran, across Iraq, and through and across Syria is crucial to the development of the Banias port and its surrounding infrastructure in Syria. This has long been earmarked as the end point for the long-planned Iran-Iraq-Syria pipelines that would move Iranian oil and gas from Iran through Iraq to Syria, and then into the less rigorously policed ports of southern Europe. It has also long been the final part of Russian and Iranian plans to build a ‘Land Bridge’ from Tehran to the Mediterranean Sea by which they could exponentially increase the scale and scope of weapons delivery into southern Lebanon and the Golan Heights area of Syria to be used in attacks on Israel, as also analysed in depth in my new book on the new global oil market order. This core aim of this policy is to provoke a slow-burn broader conflict in the Middle East that will inexorably draw in the U.S. and its allies into an unwinnable war of the sort seen recently in Iraq and Afghanistan. By placing itself in the geographical heart of this route at intervals along the spine of Iraq, China will be able to continue to play the directing role in how and when Russia and Iran develop their long-term geopolitical strategies across the region and beyond. And it is this that will also boost its negotiating position with the upcoming new Trump presidency in matters of key concern to it, such as trade, U.S. sanctions deployment, and the future of Taiwan.
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