Iraqi PM seeks U.S. investment as war disrupts Hormuz oil flows
Chevron plans to sign preliminary agreements Friday to invest in two major Iraqi oil fields and will join a consortium of investors exploring the construction of a pipeline to connect Iraq’s oil production with the Mediterranean coast, bypassing the Strait of Hormuz, the Wall Street Journal reported. The deals are part of a broader push by Iraqi Prime Minister Ali Al Zaidi to secure U.S. investment as the war with Iran has disrupted exports through the strategic waterway.
The U.S. Chamber of Commerce is scheduled to host a U.S.-Iraq Business Summit in Washington on Friday with Zaidi, Energy Secretary Chris Wright, and others, where the chamber says $60 billion in deals will be signed. Trump met with Zaidi at the White House on Tuesday during the prime minister’s weeklong visit.
One option the Chevron consortium is considering is rebuilding the pipeline from Kirkuk in northern Iraq to the Syrian port of Baniyas on the Mediterranean, which has been shut for more than two decades, a senior Chevron official told the Journal. The pipeline was damaged during the U.S. invasion of Iraq in 2003. The consortium also plans to conduct technical studies on whether to build a new pipeline or update existing infrastructure that would connect with pipelines through Turkey, the official said.
Chevron is also discussing investments in two major Iraqi oil fields: West Qurna 2, one of the world’s largest onshore fields producing about 460,000 barrels a day, and the smaller Nasiriyah field. Before the Iran war began, Chevron said it was entering exclusive talks with state-run Basra Oil for a stake in West Qurna 2, after Iraq removed Russia’s Lukoil as the operator.
Zaidi visited Chevron’s headquarters in Houston on Thursday to meet a group led by Chevron Vice Chairman Mark Nelson. “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,” Clay Neff, president for upstream operations at Chevron, said in a statement.
Iraq is the Middle East’s second-biggest oil producer behind Saudi Arabia. In normal times, it pumps about 5% of the world’s oil, or 4.5 million barrels a day, but its exports have plunged during the war. The country’s large southern fields depend almost entirely on exports through the Strait of Hormuz, and northern pipeline alternatives to Turkey’s Ceyhan terminal are limited, according to Rystad Energy.
The war has effectively closed the Strait of Hormuz, through which about 20% of the world’s oil once passed. Gulf governments are pouring billions of dollars into new pipelines, rail corridors, and energy storage hubs to bypass the chokepoint — a restructuring the Wall Street Journal reports is set to become one of the most durable outcomes of the conflict.
Zaidi, who assumed office earlier this year, was a political unknown who had never held office. He owned a bank that the U.S. Treasury had banned from dollar transactions over suspicions it was doing business with an Iran-linked militia leader. Zaidi gained Trump’s endorsement, which was accompanied by a demand that he curb Tehran’s influence in Baghdad.
The Chevron executive said the company has been in talks with the Iraqi government for 12 to 18 months, and the deals are a “long ways from the finish line.”