After long years of absence, major American oil and energy companies are returning to Iraq with contracts worth billions of dollars, covering fields that stretch from Basra in the south to Mosul in the north.
In October alone, Iraq signed three major contracts with U.S. firms, as part of a broader string of deals sealed with American companies since the start of this year.
Meanwhile, competing firms – particularly Russian ones such as Lukoil – are struggling to continue operating in Iraq, with reports suggesting the company plans to halt its operations due to U.S. sanctions.
The return of American companies raises questions about the motives and timing behind this renewed engagement.
“U.S. and foreign oil companies rushed into Iraq after 2003 seeking opportunities, but the contract terms were never good. Companies like ExxonMobil were forced to withdraw or scale back investments,” said Matthew Reed, vice president of the Washington-based consultancy Foreign Reports, to Alhurra.
He added: “The reason companies are returning now is that Iraq has improved its commercial terms. Baghdad recently realized it needs to offer better conditions to attract top-tier companies – including American, French, and British ones.”
According to Abdul Rahman al-Mashhadani, a member of Iraq’s governmental industrial advisory team, Baghdad is “courting the Americans, as they remain the ultimate decision-makers globally.”
The move to bring back U.S. companies comes at a critical juncture for Iraq, as the country holds general parliamentary elections whose results may shift the balance of power and reshape Baghdad’s often-uneasy relationship with Washington since Donald Trump assumed the U.S. presidency last January.
Historically, Iraq was known for its tough contract conditions. But this year, it has changed the rules of the game, offering lucrative deals that have made American firms reconsider.
In October, Prime Minister Mohammed Shia al-Sudani signed a preliminary agreement with ExxonMobil to develop the Majnoon oil field, one of the world’s largest, with reserves estimated at 12.6 billion barrels. Before ExxonMobil, Baghdad contracted Chevron in August to explore four blocks in Nasiriyah, develop the Balad field in central Iraq, and initiated a joint gas-development venture between Baker Hughes and Iraq’s state-run Halfaya Company.
Earlier in 2024, Iraq also awarded KBR a $12 million engineering contract for the Bin Umar field.
Iraq ranks fifth globally in proven oil reserves (145 billion barrels)- trailing Venezuela, Saudi Arabia, Iran, and Canada, and second in OPEC in terms of production, at about 4.5 million barrels per day.
“Iraq remains one of the last bastions of easy oil. Geological risks are almost non-existent, and proven reserves are massive. As long as the security situation is acceptable and commercial terms are competitive, Iraq will keep attracting investments – it’s too big to ignore,” said Jim Krane, energy analyst at Rice University’s Baker Institute.
Krane noted that U.S. oil giants were for a long time hesitant to return because the Iraqi government insisted on a model of service-contracts that levied fixed fees and barred profit-sharing.
“The terms were so unappealing that global oil companies lost interest and left. But now, after Baghdad allowed profit-sharing, the prospects for gains are much greater,” Krane told Alhurra.
Iraq’s Oil Ministry had first launched its oil-licensing rounds in 2009, offering fixed per-barrel fees with thin profit margins.
Before these oil deals, General Electric Vernova expanded its electricity operations by signing an agreement in April to add 24,000 megawatts of gas-fueled capacity to Iraq’s national grid, which has suffered chronic shortages for decades.
In the final week of October, the United States deepened its economic footprint in Iraq. Excelerate Energy signed an agreement to build the country’s first floating liquefied-gas platform at the Khor al-Zubair port. Around the same time, Baghdad awarded an investment and management contract for Baghdad International Airport to a consortium led by Corporación América Airports, a U.S. firm.
Together, the oil and gas sectors now account for roughly 80% of U.S. economic activity in Iraq, making the country a strategic arena for American firms competing with Chinese and European players.
Over the past two decades, Iraq’s relationship with U.S. companies has been erratic – contracts were signed, then abandoned within a year or two for mostly security and some economic reasons. But today, says al-Mashhadani, the environment has changed: Iraq’s openness, economic feasibility, and security stability have improved.
“Another key factor is the improvements in Iraq’s investment climate – both in terms of security and bureaucracy. Corruption and red tape used to deter U.S. firms, but that’s easing,” al-Mashhadani added.
The Political Dimension
Last week, Prime Minister al-Sudani’s media office released excerpts from a Reuters interview in which he highlighted Iraq’s growing engagement with U.S. companies.
“Iraq and the US are having the best chapter in the history of their bilateral relations, with significant and substantive engagement from major American companies,” al-Sudani said, describing several “important” contracts signed in energy, oil, and gas-investment sectors and emphasizing a “balanced relationship with the United States based on mutual interests.”
Analysts view al-Sudani’s push to bag more deals with American companies as not only economically motivated. They believe he is trying to better the odds of his own political survival and that of Iraq’s broader stability.
“With elections approaching, al-Sudani needs fresh economic wins to maintain political momentum that translate it into votes at the ballot box,”said Raad al-Qadiri, managing director at the Boston Consulting Group, in an analysis published by the Atlantic Council last month.
Al-Qadiri added that al-Sudani’s moves also reflect anxiety over potential U.S. sanctions on Iraq’s oil sector because of Baghdad’s ties with Tehran.
He believes al-Sudani is trying to court President Donald Trump through investment incentives, inspired by the Kurdistan Region’s earlier success in leveraging energy deals to boost its political influence in Washington.
“Al-Sudani seems to be replicating that model on a much larger scale – using oil contracts as both shield and sword: a shield against U.S. sanctions and a sword to gain political support,” al-Qadiri wrote.
Observers expect al-Sudani’s coalition to face stiff competition during and after the parliamentary elections held Tuesday, particularly from Nouri al-Maliki’s State of Law coalition.
“Of course, al-Sudani is seeking U.S. and international backing since his three-year term as prime minister has been short, and he needs more time to advance his policies,” said al-Mashhadani.
“But ultimately, securing a second term doesn’t depend solely on that backing – it will hinge more on election results and the alliances formed afterward,” he added.
Ghassan Taqi
صحفي متخصص في الشؤون العراقية، يعمل في مؤسسة الشرق الأوسط للإرسال MBN منذ عام 2015. عمل سنوات مع إذاعة "أوروبا الحرة" ومؤسسات إعلامية عراقية وعربية.
