Against the backdrop of global energy transition and geopolitical changes, energy cooperation between the Republic of Iraq and the People's Republic of China is entering a new stage. In August 2025, the government of the Republic of Iraq announced the restart of the "Oil for Project" plan, a strategic initiative that will exchange oil export revenue for investment support from Chinese companies in infrastructure construction, marking a deeper level of economic and trade cooperation between the two countries.

China Iran energy cooperation began after the end of the Iraq War in 2003. As one of the first foreign companies to enter the Iraqi energy market, China National Petroleum Corporation made a significant breakthrough in the Rumaila oil field project jointly developed with BP in 2009. Over the next decade, Chinese energy companies have participated in the development of multiple major projects, including the Hafaya Oilfield and the West Gurna-1 Oilfield. According to BP's World Energy Statistical Yearbook 2023, the Republic of Iraq has proven oil reserves of 147.2 billion barrels, ranking fifth in the world, and China has become one of the most important importers of Iraqi crude oil.

The "oil for oil" program, which has been restarted this time, was personally promoted by Iraqi Prime Minister Mohamed Sia Sudani and focuses on four major areas: education facilities, healthcare, industrial infrastructure, and energy infrastructure. Among them, the 1000 school construction projects launched in 2024 and the 100 bed hospital project in Zaigal Province will be the first batch of key projects to be promoted. In the industrial sector, Chinese enterprise Shangxin Group has signed a $2 billion Basra Industrial Complex construction contract in March 2025, which will build multiple production lines including sponge iron, aluminum, and stainless steel.

The Republic of Iraq's decision to restart the program at this time has profound practical considerations. Despite the country's high crude oil export revenue of 88.6 billion US dollars in 2023, the problem of outdated infrastructure caused by long-term wars remains severe, especially the prominent shortage of electricity supply. Data shows that approximately 18 billion cubic meters of associated gas are directly burned in Iraq each year, resulting in significant waste of resources. At the same time, the global energy landscape is undergoing profound changes, with the shale oil revolution in the United States leading to a decline in the market share of Middle Eastern crude oil in the Americas, while demand in the Asian market continues to grow. According to statistics from 2020, China's crude oil imports from Arab countries accounted for 51.3% of its total imports, creating favorable conditions for deepening energy cooperation between China and Iran.

For Chinese enterprises, this plan brings comprehensive development opportunities. In the energy sector, companies such as China National Offshore Oil Corporation and China Petroleum&Chemical Corporation have obtained the development rights for 10 blocks in the Iraq oil and gas block tender in October 2024. These projects will help Iraq achieve its goal of producing 6 million barrels of crude oil per day by 2030. In the field of infrastructure, multiple projects involving companies such as China State Construction Engineering Corporation have progressed smoothly and accumulated rich local experience.

Industry experts believe that the cooperation between China and Iran in the "oil for trade project" has important strategic significance. For Iraq, this cooperation model can provide stable funding and technical support, accelerating the pace of economic reconstruction; For China, it not only helps ensure energy supply security, but also promotes China's infrastructure standards and technology exports. Under the framework of the the Belt and Road Initiative, China Iran cooperation is expected to become a model of South South cooperation and bring tangible benefits to the two peoples. With the deepening of cooperation, it is expected that more Chinese enterprises will participate in the economic construction of Iraq. The cooperation between the two sides in energy, infrastructure, manufacturing and other fields will continue to deepen, creating a new situation of mutual benefit and win-win. This successful practice will also provide useful reference for China's cooperation with other resource-based countries. (This article is from the official website of Jian Dao www.seetao.com. Reproduction without permission is prohibited, otherwise it will be prosecuted. Please indicate Jian Dao website+original link when reprinting.) Jian Dao website strategy column editor/Yang Beihua