The deal follows a meeting between Prime Minister Ali Al-Zaidi and President Donald Trump at the White House earlier in the week. Al-Zaidi and his oil ministry delegation then met Chevron executives at their downtown Houston headquarters Thursday to discuss the oilfield partnership. The Trump administration has pushed U.S. oil and gas companies to deepen their international portfolios in countries Trump has said are geopolitically advantageous.
“We appreciate the chance to meet with Iraqi leaders and talk about how our expertise in building large oil and gas projects throughout the world can support Iraq as it further develops its abundant energy resources,” said Clay Neff, President for Upstream at Chevron.
The agreements would bring Chevron closer to gaining extended exclusivity in the country’s oilfields while the oil giant would invest in the Nassiriya and West Qurna-2 oilfields, located in the south and north of Iraq respectively, a senior Chevron executive told reporters on Thursday. The West Qurna-2 oilfield is one of the world’s largest, producing about 460,000 barrels a day. Also included in the agreements is a pipeline project that would cut through Syria and into Turkey, similar to Chevron’s pipeline system between Kazakhstan and Russia.
Final contracts, however, are far from complete, said the senior Chevron executive.
Iraq was the second-largest Organization of Petroleum Exporting Countries producer before the war in Iran, but has reduced its crude production by 60% because of its reliance on the Strait of Hormuz to move its oil to international customers.
A pipeline that could ease the global reliance on the Strait, which has largely been shuttered since the war began on Feb. 28, cutting off more than 20% of global petroleum products, would be lucrative for Chevron and Iraq, and could help weaken one of Iran’s largest bargaining chips in its negotiations for a ceasefire with the United States.
The Iran war may also push Iraq toward the prospect of leaving OPEC in the future, according to the country’s oil ministry. The conflict was the final straw for the United Arab Emirates, which left OPEC in May and this year promised billions in investments toward the Gulf Coast liquefied natural gas industry and other U.S. energy projects.
Chevron’s interest in Iraqi oil is nothing new. The company has been in talks with the regime for more than a year, the senior executive said, and has signed a number of agreements regarding potential projects in Iraq and Syria over the last few months.
After his meeting with Al-Zaidi earlier in the week, Trump touted the potential for new oil projects to help both countries.
“We’re going to create a lot of jobs for both countries, and we’re going to be taking out a lot of oil. A lot of oil is coming out, and the American companies are doing it,” Trump said Tuesday.