Oil Drives ‘New Trade Axis’ Between Iraq And No. 1 Customer China
March 28, 2013 by Ben Bullard
China’s thirst for Iraqi oil is propelling an alliance between the two Nations that, according to the International Energy Agency (IEA), promises to send 80 percent of Iraq’s future petroleum exports to China.
The agency’s chief economist said there’s “a new trade axis being formed between Baghdad and Beijing” at a time when American interests in Iraqi oil are as low as they’ve been in the 10 years since U.S. troops first occupied the country.
Couple China’s aggressive search for a generous petroleum reserve with the American oil industry’s reluctance to brave the instability of Iraq’s infrastructure, safety and political climate, and the Iraqi-Chinese “axis” comes into clearer focus.
“The fact that [Chinese oil company] PetroChina is expanding in Iraq is not to me a sign of their strength; it’s a sign of their weakness,” said a New York-based energy consultant.
That’s because, despite the massive public investment that went into the United States’ invasion and reconfiguration of the Iraqi regime, American companies have the luxury of choosing more attractive petroleum mining options elsewhere (including on their home soil), rather than deal with the postwar headache that Iraqi oil logistics has become.
China, meanwhile, has far fewer options, and currently lacks the technology to explore recent and unconventional extraction methods that are benefitting U.S. companies at home and in West Africa.