Will the future of Iraq's oil be in Russia's hands?

Despite the continued protests in Baghdad and the departure of many foreign diplomats for security reasons, Russia's strength continues to multiply. Not only has its embassy remained open in recent weeks of unrest, but Russian Foreign Minister Sergei Lavrov first visited Baghdad last month and then Erbil.

The writers Vera Mironova and Mohammed Hussein in their report published in the magazine "Foreign Policy", said that the visit is not similar to the usual diplomatic missions, as there were no formal agreements signed and the policy or the issue of Syria and terrorism are the focus of attention. The majority of the participants were businessmen, including representatives of Russian oil and gas companies such as Rosneft and Lukoil.

"Only bilateral trade relations were discussed during the meetings, and the Russians wanted to make sure everything went smoothly on Russian energy companies' projects in Iraq," said one source with ties to the Iraqi prime minister, who asked not to be named.

Unsurprisingly, after investing more than $ 10 billion in Iraq's energy sector over the past nine years, Russia's attention in the country will be mostly focused on trade concerns.

Deals and Agreements
The Russian companies are well represented among the oil companies in Iraq, and as long-term oil and gas contracts, the Russian market share will increase over time. Other deals dating back to 2011 include $ 2.5 billion in investments by Gazprom and its partners in central Iraq. And the Kurdistan region alone.

In addition, Gazprom has produced 3 million barrels of Gergian oilfields at Surgla and launched several exploration projects in Halabja and Shaqal. In September, Russia's Stroetrasgaz won a 34-year contract to explore for oil and gas in Iraq's Anbar province. According to a source in the prime minister's office, Lavrov thanked Iraq in particular for the agreement during his visit.

The authors point out that Russia is not only interested in oil fields, note that Rosneft owns 60% of the Kurdistan oil pipeline, the main operational export line in Iraq.

In spring 2018, Rosneft also announced the signing of an agreement with the KRG's Ministry of Natural Resources to develop its oil and gas infrastructure, including the construction of a new gas pipeline with an expected export capacity of 30 billion cubic meters of gas per year. About 6% of total gas demand in Europe.

According to an Iraqi politician in November, who declined to be identified, "thanks to this deal, Russia gained a lot of political influence in Iraq. Oil represents about 96% of Iraq's exports, but in the absence of a pipeline to export it, "Oil is worthless for the country. Therefore, Russia today is basically in control of the export process."

After the fall of Saddam Hussein's regime in 2003 and the occupation of Iraq, Russian companies were largely absent, and with the increase in sectarian conflict in 2009 everything changed, as many Western oil companies left the country. That time (such as ExxonMobil and Chevron) region partly or wholly because of security concerns, and then replaced by Russian companies.

In fact, Russia's entry into Iraq was welcome. “At that time, there was no need for the Russians because the US presence and support was strong in the region,” a KRG leader said this month. “Later, when Kurdish leaders were disappointed with the Americans, the Russians seemed stronger and more friendly in their eyes. "In Kurdistan, a trade deal with the Russians would offer many other political and security benefits."

Control of Iraqi oil
Some of the companies that develop Iraqi oil, including Gazprom and Rosneft, are on US sanctions lists for their association with the Crimean annexation process and Russia's involvement in the conflict in eastern Ukraine, but Iraqi officials are not concerned.

President Donald Trump may claim that the United States remains engaged in the region's oil sector. For example, Trump said during a meeting with his Turkish counterpart Recep Tayyip Erdogan: "We hold and own oil, so oil is safe." Soon, however, the dollar will lose its place in trade, with Iraq and Russia discussing the importance that payments be limited to rubles or dinars rather than dollars to avoid any relationship with the US system.

In conclusion, the authors note that Russian control of oil in Iraq and Syria represents a long-term economic and political blow for the United States. This is because oil is the main currency in these two countries, and whoever controls it will have a key role in determining geopolitics in the region.