Iraq signs major oil contract with Chinese company ZhenHua
Iraq signs major oil contract with Chinese company ZhenHua | Flash News
A Chinese state-run company has won a baghdad bid to buy 4 million barrels of oil per month for five years, Before receiving the first shipment, ZhenHua will have to pay more than $2 billion.
The Iraqi government is about to sign a long-term contract with the Chinese company ZhenHua "for several billion dollars,
The state-owned oil company was selected in a tender by the State Oil Marketing Organization, the state agency responsible for marketing Iraqi oil, the US news agency said:
Government spokesman Hassan Nadhim said on Tuesday [8 December] that there were 'several offers' and that they would be considered before Prime Minister Mustafa Al-Kadhimi made the final decision.
The winner of the tender will buy 4 million barrels of oil per month for 5 years, and will have to pay a year's supply in advance. At current crude oil prices, this represents a down payment of more than $2 billion.
A welcome currency for this depleted country. All the major oil producers have suffered from the drop in demand - and therefore prices - caused by the Covid-19 pandemic, the site says. "But Iraq, where oil provides virtually all state resources, is in a particularly difficult situation. Its economy will contract by 12% this year, the International Monetary Fund predicts." According to IMFfigures,the country is expected to have a GDP of $178 billion in 2020 and a debt ratio of 68.3%.
This type of contract, which amounts to a kind of oil-repaid loan, is not a first for China, where trading companies and state-controlled banks have already signed them with troubled oil countries such as Angola, Ecuador and Venezuela.
This is "one of the largest in recent history" by its amount, but it is far from the record set in 2013 by Rosneft, Bloombergnotes. At the time, the Russian state-backed oil company received an initial payment of $10 billion from Glencore and Vitol, two Trading houses domiciled in Switzerland.
Source:- Flash News and News Agencies