China’s Zhenhua Oil is expected to sign an agreement with Iraq’s State Oil Marketing Organization (SOMO) to establish a joint venture (JV) company, two industry officials with direct knowledge of the matter told Reuters.
The deal is expected to be agreed at the China International Import Expo in Shanghai during November 5-10, which will be attended by many foreign companies and Chinese buyers.
Zhenhua and SOMO have been in negotiations for months about establishing the JV, which will increase Iraq’s economic involvement in the Asian energy sector. The JV will be based in the Chinese port city of Tianjin, one of the sources told Reuters.
Chinese imports of Iraqi crude rose to 863,000 barrels per day in the first nine months of 2018, a 15% increase on the same period in 2017, according to Chinese customs data.
Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).