This fascinating. The entry of China into Iraq oil is a actually a sign of our strength… and will redound to our benefit when the oil hits the world market… Very interesting…
“The fact that PetroChina is expanding in Iraq is not to me a sign of their strength, it’s a sign of their relative weakness,” Houser said.
Birol, the chief economist at the International Energy Agency, said that nearly a third of the future oil production in Iraq was expected to come from fields that either were directly owned or co-led by Chinese companies.
Oil companies from the U.S. and other Western nations have been more interested in the Kurdistan region of Iraq, a largely autonomous area that doesn’t take orders from Baghdad. Kurdistan offers more stability and better contract terms to the international oil companies, to the fury of the Baghdad government, which is charged with handling international affairs and calls the contracts illegal.
Western oil companies generally have more attractive global investment opportunities than Iraq, said Luft, who’s an adviser to the U.S. Energy Security Council, a nonprofit group that works to lessen dependence on fossil fuels.
They also need to answer to their shareholders, and they see the world differently from the way state-owned Chinese companies do, he said.“The Chinese oil companies are more in tune with the geopolitical agenda of their government and respond less to shareholders,” Luft said. “If Exxon operates somewhere and has to close down operations for a month, that would have an impact on investors. When the Chinese go into one of those places and something bad happens, there is not the consequence in terms of stock.”
Luft said he didn’t see Chinese development of Iraq’s oil as a case of China enjoying the spoils of a war for which the U.S. had paid dearly both in lives and taxpayer dollars.
It’s a myth that U.S. energy security relies on Middle Eastern imports, he said. Oil from the region makes up just a small percentage of what America uses. The U.S. will benefit if China or anyone else can get Iraqi’s huge reserves developed and onto the market, he said. Since oil is a global commodity, he said, more oil on the market brings down prices.
“Energy security is about not only the availability of the resource but also about the cost,” Luft said. “Anything that brings down global oil prices is positive for U.S. energy security.”