[News] After the invasion: Who really took Iraq’s oil?

[Anti-Imperialist News]

 After the invasion: Who really took Iraq’s oil?

The US-led war pried open Iraq’s energy sector, but the oil order that
followed did not unfold as its architects expected. Chinese firms now
occupy much of the ground western majors abandoned.

Hussein Askary <https://thecradle.co/authors/hussein-askary-123>

AUG 10, 2026 -
https://thecradle.co/articles/after-the-invasion-who-really-took-iraqs-oil
Photo Credit: The Cradle

It is often said, almost as a matter of common sense, that the US and
Britain invaded Iraq in 2003 to seize the country’s oil.

The charge carries political force. Iraq possesses some of the world’s
largest conventional reserves; oil companies from the invading states
entered after the occupation; and the war was followed by a sweeping
reorganization of the Iraqi state and economy.

Yet the identity of the companies now most active in Iraq’s fields
complicates that slogan. If the aim was simply to hand Iraqi oil to US and
British firms, the result is strikingly paradoxical: Chinese companies now
hold a commanding position in the upstream sector.

The fact check does not exonerate the invasion, nor does it remove oil from
the story – nor should the oil motive be treated as the only motive. One
key motive is that the US and Britain used the Iraq War to assert a new
Anglo-American doctrine above the UN Charter-based, Westphalian system of
sovereign and independent nations.

At a moment when Russia was still weakened by the post-Soviet collapse, and
China had not yet become the formidable power it is today, the invasion
served notice that Anglo-American power, rather than international law,
intended to arbitrate world affairs.

That domination also took a financial form. Executive Order 13303, issued
in May 2003 and renewed by successive US administrations, protected Iraqi
petroleum proceeds from attachment in US courts. The original Development
Fund for Iraq (DFI) ended in 2011, but Iraqi oil revenues still flow
<https://thecradle.co/articles/why-does-the-us-still-control-every-penny-of-iraqi-oil-revenues>
into a Central Bank of Iraq account at the Federal Reserve Bank of New
York, giving Washington leverage over Baghdad’s access to dollars.

A *Reuters* investigation
<https://www.reuters.com/business/energy/how-us-controls-iraqs-oil-revenues-2026-01-23/>
published in January 2026 described this as effective US control over a
critical choke point in Iraqi state finance. The arrangement is not the
same as corporate ownership of the oil, but it exposes the political
economy behind the occupation more clearly than a simple tale of physical
plunder.

*The contract Iraq kept*

One obstacle facing foreign majors was constitutional and contractual. Article
111 of Iraq’s constitution
<https://www.constituteproject.org/constitution/Iraq_2005> declares oil and
gas the property of all Iraqi people. In federal Iraq, development has
largely proceeded through technical service contracts (TSCs).

The state retains ownership of reserves while foreign companies provide
exploration, drilling, engineering, management, and operating services in
return for cost recovery and a remuneration fee.

This differs from the production-sharing contracts favored by many private
firms and used by the Kurdistan Regional Government (KRG), under which
contractors gain more direct exposure to production revenues and potential
upside.

Shell, ExxonMobil, and BP became prominent in post-2003 Iraq, but tight
fees, payment disputes, security risks, bureaucracy, and infrastructure
bottlenecks made federal fields less attractive than other assets in their
portfolios.

Shell left Majnoon in 2018
<https://www.reuters.com/article/business/shell-hands-over-iraqs-majnoon-oilfield-oil-officials-idUSKBN1JN0YD/>,
transferring operations to the state-run Basra Oil Company. ExxonMobil exited
West Qurna-1
<https://www.reuters.com/article/business/shell-hands-over-iraqs-majnoon-oilfield-oil-officials-idUSKBN1JN0YD/>
and handed the lead-contractor role to PetroChina at the start of 2024. BP
and PetroChina, meanwhile, transferred their interests in Rumaila to Basra
Energy Company Limited in 2022.

Rumaila is the clearest example. BP became the leading western name
associated with the field, one of Iraq’s largest and most important
producing assets. Yet the operational reality includes extensive Chinese
participation. Basra Energy Company, the field company, reflects the
BP–PetroChina partnership.

China Petroleum Engineering and Construction Corporation won engineering,
procurement, construction and commissioning work for crude-oil processing
facilities. CNPC Daqing Drilling Engineering has been associated with
drilling and EPC work. In other words, a flagship British-linked oil
project in Iraq depends heavily on Chinese technical execution.

Majnoon tells a similar story in a different sequence. Shell was the lead
operator before exiting. After the western major stepped away, publicly
available project information identifies Chinese EPC and oilfield firms
such as China Petroleum Engineering, China National Petroleum and Hebei
Huabei Petroleum Engineering Construction as contractors involved in
development activity.

The point is not that Shell directly handed every task to a Chinese
company. It is that the western major did not stay to dominate the field
over the long run, while Chinese engineering and service capacity became an
important part of the work needed to keep Iraqi oil development moving.

West Qurna-1 is more symbolic still. ExxonMobil, the emblematic US major,
once served as lead contractor. By 2024 PetroChina had taken its place.
This was not a Chinese subcontractor operating beneath an American giant,
but the American company leaving as its Chinese counterpart moved to the
front.

The field’s low-remuneration service structure helps explain why Exxon grew
frustrated and why PetroChina was prepared to remain.

*China takes the ground*

The pattern extends beyond the legacy supergiant fields. Iraq’s newer
exploration, development, and production contracts have accelerated China’s
advance. During the May 2024 licensing round, Chinese companies secured 10
oil and gas projects
<https://www.reuters.com/business/energy/chinese-companies-win-more-bids-explore-iraq-oil-gas-2024-05-12/>,
while the Kurdish KAR Group won two.

The successful Chinese bidders included CNOOC, ZhenHua, Anton Oilfield
Services, Sinopec, Geo-Jade, Zhongman Petroleum, and United Energy Group.
No US oil major participated. Chinese firms have appeared across Wasit,
Diwaniyah, Baghdad/Wasit, Muthanna, Basra, Najaf, Baghdad/Salah al-Din, and
Najaf/Karbala. The work spans seismic surveys and wildcat drilling through
appraisal, development planning, and early production.

The newer contracts complicate this picture. Baghdad has begun replacing
some older service arrangements with profit-sharing terms designed to
attract investment. In October 2024, CNOOC signed an EDPC for Block 7 under
this model. China’s rise in Iraq therefore cannot be explained solely by
its willingness to accept low TSC fees. Chinese firms are also securing
<https://thecradle.co/articles-id/33303> the more commercially attractive
contracts Baghdad is now offering.

The phrase “the west invaded Iraq for oil” thus requires precision. If it
means that Iraq’s strategic energy position shaped western policy, the
claim remains historically important. Oil never disappeared from the
calculations surrounding the war, from prewar planning to the occupation
authority’s early decisions and the restructuring of the sector.

Nor can corporate outcomes alone settle a question of state strategy. But
if the phrase means US and British companies secured lasting control of
Iraqi production and captured most field-level profits, the evidence points
elsewhere.

Federal contracts limited foreign ownership and upside, and several western
majors judged the returns inadequate for the risks. An invasion can
reorganize a strategic sector without producing the simple corporate spoils
its critics expected.

Chinese companies approached the same terrain differently. State-owned
groups and smaller independents alike have accepted demanding conditions,
lower immediate margins, and returns measured over decades rather than
quarters. They draw on integrated supply chains, lower development costs,
Chinese equipment, engineering depth, and a greater tolerance for political
and operational risk. This has allowed them to move faster and remain where
western firms have reduced their exposure.

The logic is strategic as well as commercial. China is the world’s largest
crude importer and plans for energy security across decades. Iraq offers
immense reserves, favorable geology, and comparatively low production
costs, even when politics and infrastructure complicate operations.

China is also a major buyer of Iraqi crude
<https://thecradle.co/articles/chinese-energy-firms-top-buyers-of-iraqi-oil>,
linking participation at the wellhead to a much wider trading relationship.
A modest fee today can secure relationships, geological knowledge,
infrastructure positions, crude-supply links, and diplomatic influence
tomorrow.

The value may accrue across a state-backed corporate ecosystem rather than
on one project’s balance sheet. Iraq is therefore not merely an oilfield
balance sheet for Beijing, but part of an energy map spanning the Persian
Gulf, Central Asia, Africa, and the wider Belt and Road geography.

Western majors answer to a different set of pressures: shareholder returns,
capital discipline, and portfolio performance. They seek high-margin
barrels, regulatory predictability, and contractual upside.

When Iraq combined difficult operations with limited remuneration, several
reduced their exposure, divested, or relied more heavily on contractors.
Chinese firms increasingly performed the less celebrated but indispensable
work of drilling, fabrication, project management, and incremental
development – the work that turns Iraqi geology into production.

The same industrial shift is visible beyond Iraq. Chinese yards and
engineering companies have fabricated modules and hulls for western-led
offshore projects in Brazil and Guyana. These examples do not mean Chinese
contractors control Shell or ExxonMobil.

They point to a subtler dependency. Even where western majors remain
operators, a growing share of the industrial base required to build complex
energy infrastructure is located in China.

*The Kurdish exception*

A different arrangement developed in the Kurdistan Region
<https://thecradle.co/articles-id/7278>, where companies including DNO,
Genel Energy, Gulf Keystone Petroleum, HKN Energy, and Hunt Oil operated
under production-sharing contracts.

These offered more direct exposure to production revenues and resembled the
terms private western companies often prefer. They also became the center
of a long constitutional struggle between Erbil and Baghdad over who could
sign contracts, market crude, and receive the proceeds.

Iraq’s Federal Supreme Court ruled the KRG oil and gas law unconstitutional
in 2022, while the closure of the Iraq–Turkiye export pipeline in 2023
further exposed the model’s legal and financial fragility.

Federal Iraq’s TSCs preserved stronger formal state ownership but offered
less upside. Western firms consequently became more visible where contracts
resembled production sharing, while Chinese companies proved more willing
to work within Baghdad’s service-contract system and, later, its hybrid
profit-sharing adaptations.

Many observers in Iraq fear that the current government might seek to
generalize this model to curry favor with Washington, which exercises
significant influence over the Iraqi economy through E.O. 13303. While
Article 111 establishes public ownership of oil and gas without prescribing
a single contractual model, such an expansion could intensify disputes over
federal authority, revenue distribution, and the absence of a comprehensive
oil and gas law. Oil supplied roughly 95 percent
<https://www.eia.gov/international/content/analysis/countries_long/Iraq/pdf/iraq_2024.pdf>
of Iraqi government revenue in 2022, according to the US Energy Information
Administration. Manufacturing and agriculture were badly damaged by war,
sanctions, underinvestment, import dependence, and post-2003 mismanagement.

To attribute their decline solely to the 1990s embargo and Anglo-American
rule would conceal other causes, but Iraq’s failure to diversify has left
the state exceptionally vulnerable to oil prices and external financial
pressure.

*An occupation’s unintended order*

The conclusion is not that China ‘stole’ oil that Washington and London had
intended to seize. Under the federal model, Iraq’s reserves remain state
property. Nor was western power irrelevant. The war opened Iraq to
international oil companies, while the dollar system created after the
invasion preserved extraordinary US leverage
<https://thecradle.co/articles-id/1570>.

But the contracts and political conditions did not yield the high-profit
field order western majors preferred. Chinese companies, backed by lower
costs, strategic patience, and a longer view of energy security, occupied
much of the space they left behind.

Iraq has consequently become a case study in the changing balance of global
power. The older image was of western armies clearing a path for western
oil companies.

Chinese companies have taken a different approach. Both state-owned firms
and smaller independents have entered difficult projects offering limited
short-term returns. Lower costs, domestic supply chains, Chinese equipment,
and extensive engineering capacity have helped them withstand risks that
drove several western majors to scale back or leave.

The invasion’s oil legacy is therefore found less in direct Anglo-American
possession of the fields than in the system built around them: an economy
still overwhelmingly dependent on crude exports, revenues routed through
New York, and an industry opened to foreign capital on terms Baghdad has
repeatedly revised.

Yet the companies most willing to work those fields are increasingly not
from the states that invaded Iraq in 2003. They are Chinese – and their
rise is one of the clearest signs that the postwar order escaped the hands
of its architects.
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