Politics
Biden responds to Chinese presence in Iraqi energy sector
The U.S. government is working to bring American companies to Iraq to rebuild its energy sector in an effort to outpace Chinese investors, reduce emissions from Iraq's booming oil and gas production and counter the growing influence of Iran.
In August, Forbes reported that over the past four years, Iran has become more energy dominant, cash rich and globally influential. The Biden administration is now moving quickly to help Iraq under its new business-friendly prime minister, Mohammed Shiaa Al-Sudani.
Everyone recognizes the asset that Iraq, OPEC's second-largest proven reserve, represents, Geoffrey Pyatt, the State Department's assistant secretary for energy resources, told Forbes.
Iraq has 145 billion barrels of proven oil reserves, representing about 100 years of supply at current production rates, according to the World Bank.
However, when the United States invaded Iraq in 2003, it destroyed critical infrastructure, including Iraq's electricity infrastructure, leaving the country deficient and unable to rebuild until now.
Two decades of American blood and treasure are in Iraq and we should not forget it, Pyatt said.
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Today, the relationship is entering a new phase.
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American national security is at stake in pushing back against China.
The development of Iraq's energy system is also an opportunity to usurp China's position in the region, Pyatt said.
The deputy secretary said the growth of Iraq's energy sector would take place in a market environment.
And unlike the Chinese who may have other motivations, our companies will get involved where they believe there is an asset, but also where there are options to recover capital and make progress, Pyatt said .
China, already one of the main operators of oil and gas fields in Iraq, is developing 10 more. oil and gas fields after winning a tender process to develop selected blocks earlier this year.
Pyatt said: “Sudani is serious about attracting Western investment to the sector. When I was there in May, I felt a real sense of chagrin that the fifth and sixth tenders had been awarded entirely to small, not particularly competent Chinese bidders, and that there had a lack of large Western companies.
China imports more crude than any other country, more than 11 million barrels of crude per day. Iraq is the country's third largest source of oil, behind Russia and Saudi Arabia.
Iraq sends 35% of its crude to China, and the trade volume between them, the sum reaches 50 billion dollars.
China could, however, end up buying the new Iraqi oil and gas developed by American companies.
Pyatt is not concerned.
This is a globally integrated oil market, so I'm not worried at all about the flag on the molecule. It is a fungible and integrated market, with the exception of Russia, which has managed to sink deep into the penalty box because of Ukraine and is excluded from traditional markets, he said. -he declared.
A quick friendship that grows quickly
This relationship between the new Iraqi government and the American government has been developing for almost 6 months.
After Soudani's visit to Washington in April, Pyatt visited Baghdad, Jordan and Saudi Arabia, sparking a series of memorandums of understanding, meetings and collaborations.
In the last month alone, the US State Department has hosted high-level meetings between the Sudanese and energy giants like GE Renova, Total, BP, Baker Hughes, Haliburton, Hunt and Honeywell.
With a sense of urgency, Pyatt, Sudani and senior leaders from the American Chamber of Commerce and the energy industry gathered in Houston for Gastech, the international ministerial-level conference of gas industry leaders natural. They met again a week later during Climate Week in New York and the United Nations General Assembly.
On Oct. 1, the U.S. Export Import Bank announced that Congress had allowed it to release nearly $300 million to Iraq's Electricity Ministry, which will pay for Stellar, based in Jacksonville, Florida.
Stellar
The Iraqi government will pay Stellar $297 million for a project that EXIM says will increase the availability and reliability of electricity in Iraq by generating electricity using waste heat and support 600 American jobs in more than half a dozen states.
The agreement was part of A billion dollar package to support American exports.
EXIM is the U.S. export credit agency that helps U.S. companies export products and services to international markets to compete for global sales. It offers financing including export insurance, working capital guarantees, loan guarantees and direct loans.
In documents obtained by Forbes, Stellar will convert two of Iraq's three single-cycle power plants to combined-cycle natural gas-fired units.
Once converted, the total generation capacity of the Iraqi plant will increase from 550 MW to 835 MW, an increase of approximately 40% in electricity generation capacity.
According to EXIM Bank's notice to Congress, the project represents a significant expansion of energy produced without a significant increase in greenhouse gas emissions.
EXIM said increasing electricity generation would result in a 31.2% reduction in GHG emissions per MWh generated.
Stellar will undertake engineering, procurement, construction, commissioning, design, health and safety management and operational training of staff. The London branch of JP Morgan Chase Bank is EXIM's secured lender.
Beyond EXIM, the American International Development Finance Corporation also invests in Iraq. A DFC official told me that active investment in Iraq's energy sector totals $299 million.
The agency said its energy priorities in Iraq and across its global portfolio focus on wind, solar, methane reduction and carbon capture, among other clean energy investments.
Between 2004 and 2011, the The United States Trade and Development Agency helped Iraq invest $2 million in programs to develop Iraq's energy, natural resources and mining sectors.
A USTDA official explained to me that the aid falls into two categories: training programs in technical, management and human resources for the oil sector, and reverse trade missions that bring delegations of officials of the Iraqi oil sector in the United States to examine American innovations with the aim of exporting American technology.
The goal at the time was postwar reconstruction before the United States withdrew its military troops, which it essentially did in 2011. Although the Agency did not work in Iraq for several years, the USTDA has been open to new programs in the field. country if a proposal fits our demand-driven funding model.
Climate change, a glimmer of hope
There is another priority for the Biden administration: reducing emissions.
In an interview, Pyatt told me that there are enormous opportunities under the Soudani regime to bring efficiency to Iraq's traditional energy sector, as well as opportunities to capture gas that is currently being released at record levels.
They are one of the largest emitters in the world. The volume of gas they currently vent or flare is comparable to the volume of energy they import from Iran, Pyatt said.
Currently, when Iraq drills for oil, the associated gas is flared. Flaring poses a danger to the environment and a loss of gas revenue for the Iraqi government. The goal is to reduce flaring and channel this natural gas to the power sector.
For the United States, much depends on Iraq's sovereignty and economic success, as well as the current convergence of interests between the American and Sudanese vision, particularly its goal of achieving zero imports of by 2030, Pyatt said.
Iraqi Oil Minister Hayan Abdel-Ghani said in Houston that he wants Iraq to end all flaring by 2028, which is also in line with the Biden administration's climate goals, Pyatt said .
Iraq will soon select a contractor to install solar systems on the roofs of more than 500 public buildings.
According to Middle East Utilities magazine, Ziad Fadil, Iraq's electricity minister, confirmed that nearly $68 million has been guaranteed in the 2024 national budget, underscoring the government's commitment to addressing the country's chronic electricity supply challenges.
An Iraqi official who spoke on condition of anonymity said Iraq was one of the world's biggest victims of climate change. It's a real problem, he said.
Ironically, as countries strive to meet global climate goals to achieve carbon neutrality by 2030, Iraq could then produce record volumes of oil and gas for the global market.
Not the way I see it. The market will decide when demand for fossil fuels begins to decline. The IEA says this will happen within this decade. The United States is working to achieve this, Pyatt said.
THE International Energy Agency (IEA) predicts a sharp global decline in fossil fuel supplies between 2022 and 2050.
In the meantime, we need to make sure we're doing everything we can to reduce climate intensity, the climate footprint of the fossil energy the world produces, Pyatt said.
He said he liked that the Kingdom of Saudi Arabia was celebrated Vision 2030 model in which the country increases renewable energy capacity for its national grid but sells its oil and gas on the global market.
The more they supply the national economy with renewable energies, the more molecules they have left to sell on the global market. Iraq should follow the same path, Pyatt said.
In May, Oil Minister Abdel-Ghani said he wanted to increase Iraq's proven reserves to 160 billion barrels by producing 29 new oil and gas fields.
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