Iraq ranks ninth globally in terms of underground natural resource reserves and first in terms of investible natural resource reserves per square kilometer, such as phosphates, sulfur and other important reserves. Although Iraqi Prime Minister Mohammed al-Shia met with representatives of U.S. companies during his visit to the United States last month, this time the U.S. oil giants did not participate in the bidding process.
Iraq's Oil Minister announced on May 12, 2024 that Chinese companies have won five more oil and gas field exploration rights on the second day of the Middle Eastern country's hydrocarbon exploration tender.
So far, the Chinese company is the only foreign company to have won the tender, having been awarded 10 hydrocarbon field exploration licenses since Saturday, while Iraq's KAR Group has been awarded only two.
The current tender, which covers 29 oil and gas projects aimed at boosting domestic production, has attracted more than 20 companies for pre-qualification, including some groups from Europe, China and the Arab region.
Photo GettyImages
Iraq is counting on this licensing exercise, particularly to increase natural gas production in order to reduce its dependence on Iranian gas imports, but unfortunately the failure to bid for at least six fields with natural gas potential may pose a challenge to achieving this goal.
It is worth mentioning that although Iraqi Prime Minister Mohammed al-Shia met with representatives of U.S. companies during his visit to the United States last month, this time the U.S. oil giants did not participate in the bidding process.
Oil Minister Hajan Abdul Ghani revealed that China's CNOOC Iraq succeeded in winning the tender for the oil exploration project in Iraq's Block 7, which covers the central and southern governorates of Diwaniyah, Babil, Najaf, Wasit and Muthanna, in a highly competitive bidding process.
The minister also said that Zhenhua, Anton Oilfield Services Company and Sinopec were awarded the right to develop the Abu Haima field in Muthanna, the Dufriyah field in Wasit and the Sumer field in Muthanna, respectively.
The Iraqi Oil Minister also said the Chinese company Intercontinental Oil and Gas, which was awarded the right to develop Iraq's Jabal Sanam oil field, will be responsible for oil exploration in Basra province.
Iraq, OPEC's second-largest oil producer after Saudi Arabia, has been hindered in developing a vibrant oil sector by a number of factors, including contract terms considered unfavorable by oil companies, ongoing military conflict and growing investor concerns about environmental, social and governance standards.
Government measures put Iraq at the forefront of foreign investment
In a recent interview, Mazar Mohammed Saleh, financial adviser to the Iraqi Prime Minister, pointed out that the Iraqi government has managed to put the country at the forefront of foreign investment in the world through a series of measures.
In particular, he noted that the implementation of the Road to Development program and the Greater Faw Port have significantly strengthened the government's efforts in attracting foreign investment.
Saleh said, "The Iraqi economy has two key strengths that give it a significant advantage in foreign investment. First, Iraq's oil production, which accounts for about more than 7 percent of GDP and is the second largest in the OPEC organization and fifth largest globally, according to estimates by the Center for International and National Economy, generates significant foreign exchange inflows. Second, Iraq offers a wide range of investment opportunities in sectors such as transportation, digital communications, housing and reconstruction, encouraging partnerships between the state and the private sector in the fields of industry and technology. The latest policy move is the Cabinet's adoption of facilitation directives aimed at facilitating the deepening of existing cooperation between the state and the private sector on the basis of mutual benefits, which undoubtedly releases positive signals for foreign direct investment."
He also stressed that "Iraq's investment law has created an attractive environment for investors, especially as the trend of economic surpluses in countries in the region has led to favorable investments in Iraqi industry, agriculture and other fields. This sends a positive signal to the international investor community, encouraging them to come to Iraq and explore the business opportunities that are full of potential here."
He added, "The 'Road to Development' project, as our central strategy based on the concept of driving development, was central to our invitation to international companies to participate. The project, which starts at the port of Faw and connects to the Turkish border, culminating in an economic link with Europe, highlights the core of our economic vision: to encourage foreign direct investment in development activities in Iraq, given the wealth of our underground natural resources."
He explained, "Iraq ranks ninth globally in terms of underground natural resource reserves and we rank first globally in terms of investible natural resource reserves per square kilometer (such as phosphates, sulfur and other key resources)."
Iraq attracts first wave of investment from Saudi Arabia and Gulf countries
In February 2024, Saudi Arabia announced investments totaling more than $5 billion in various sectors in Iraq, with the largest share going to the real estate sector in the capital, Baghdad.
This is the first time Iraq has attracted investment from Gulf Cooperation Council countries (including Saudi Arabia), two decades after the fall of Saddam Hussein's regime, and marks an important milestone as longstanding differences between the two countries over Iraq's relations with Iran fade.
The United Arab Emirates, the first of the Gulf countries to invest in Iraq, recently announced that it will further expand its investment horizon. After 20 years of limited investment in Erbil, the capital of the autonomous region of Iraqi Kurdistan, the UAE now plans to expand its investment to large real estate projects in Baghdad.
Qatar has also officially announced an investment in Iraq, although the exact amount has not been disclosed. The move adds the Qatari government to the long list of private Qatari investors who have made large-scale real estate investments in Baghdad.
In an effort to stimulate investment activity in Iraq, the Saudi Public Investment Fund, the economic arm of the Saudi government, formally established a new Iraqi investment arm with a $3 billion capital injection. The investment areas of the branch will cover a wide range of sectors, including infrastructure, mining, agriculture, real estate development and financial services. To better support these investments, the Saudi Public Investment Fund has also established a subsidiary of the Bank of Saudi Arabia, the Arab Bank for Iraq.
In addition, the Saudi Public Investment Fund established the Saudi-Iraqi Company as part of an initiative by Saudi Crown Prince Mohammed bin Salman. The initiative aims to create five regional companies with the goal of investing in Jordan, Bahrain, Sudan, Iraq and Oman.
According to official data and statistics, the trade volume between Iraq and Saudi Arabia increased significantly between 2021 and 2022, up to 50 percent, reaching a total of $1.5 billion. Saudi Ambassador to Iraq, Abdulaziz Al-Shammari, recently revealed that Saudi Arabia's largest investment project in Iraq is the "Baghdad Boulevard" project adjacent to the city's airport. The $1 billion investment will cover Iraq's largest shopping mall, 4,000 apartments and 2,500 villas.
Iraq expects more investment from other countries
In a media interview, Sinan Jaber, director-general of the Iraqi Ministry of Housing, said, "Since we have been discussing trade with Saudi Arabia, we have proposed that they participate in our real estate projects to support Iraq's reconstruction and address the current severe housing shortage. This proposal has been welcomed by both sides."
He also stressed that Iraq intends to offer more diversified investment opportunities to Arab and other countries. "There is a large amount of land, most of which is within the borders of Baghdad province and other Iraqi provinces. We expect to see projects in other provinces in the near future as well." Jaber added that a number of recently announced real estate projects "have brought stability to the Iraqi real estate market, and some areas where prices had risen irrationally have now come down, which is undoubtedly a huge plus for Iraq."
Farouk Ali, real estate consultant for the Baghdad Boulevard project, told the media, "The Iraqi market has a very high demand for real estate projects. Currently, there is a demand for more than 1.5 million housing units, of which 1 million are urgent and another 500,000 will be required within the next four years."
Ali also said that most of the real estate projects currently on the market are invested by Iraq or Turkey and most of them are executed by Turkish companies. However, he stressed, "today we are seeing an influx of investors from the Gulf countries, which is an important turning point that will have a positive impact on all parties."
Komen