Oil and Natural gas have always been a prominent part of Iraq's economy. Almost 99% of Iraq economy is based on crude oil export, with over 3,862.000 Barrel/Day in December 2018. Making it the third-largest oil-exporting country in the world. The country on Wednesday invited a few Indian companies to invest in the country's profitable oil and natural gas sector. The Iraq authority is welcoming this move as a strategic decision to boost oil export of the country as well as create a strong geopolitical relationship with India. With that announcement, Iraq has become India's top crude oil supplier, meeting more than a fifth of the country's oil needs. India's public sector oil companies, including IOCL, HPCL and BPCL, are the major importers of oil from Iraq.

The situation in the Middle East

Although in Gulf country like Saudi Arabia, the situation is a little different, there is little time to consider the new geopolitical reality of a weakened Gulf Cooperation Council. Having been the victim of a rather unsuccessful economic blockade by Saudi Arabia and its allies, as it turns out, natural gas giant Qatar is far better protected. With Iran has succeeded in taking low-cost advantage of a very convenient collection of events (days from the local listing of Aramco, days after the change of guard at the Saudi oil giant, days after the UAE withdrawal from Yemen, and days after the removal of Bolton), it's also worth looking at a similarly strategic Chinese move on Iraqi oil.

Trade war impact on Iraq

China's state-owned CNOOC has said that its Lingshui 17-2 natngshui 17-2 nat gas project in the South China Sea - which is 100% CNOOC operated - is expected to produce first gas at end 2021, which will go a long way toward reducing China's reliance on natural gas imports as its consumption of the gas continues to grow.

If that's not enough, US-China trade war and the American sanctions on Iran has invited a strong relationship between the Beijing and Tehran. Countering America domination on the global market. But the trade war and Washington's policy of applying "maximum pressure" on Iran with wide-ranging sanctions has shredded the country's oil revenues, sent its economy into recession and devalued its national currency. The sanctions have hit banks, corporate sector, institutes and even countries like Turkey, the United Arab Emirates and Qatar.

India's interest

Ambassador of Iraq, Falah Abdulhasan said Iraq was looking for investment by Indian companies in the oil and gas sector and the issue is likely to be discussed during Petroleum Minister Dharmendra Pradhan's upcoming visit to the country. "We are looking for investment by Indian companies in the oil and gas sector in India. There are huge opportunities in the sector," the envoy told a select group of journalists. In addition to the import of crude oil, India also imports commodities like raw wool and sulphur from Iraq. Indian exports to Iraq consist of cereals, iron and steel, meat and meat products, pharmaceutical products, agro-chemicals and tea.

The Iraqi envoy said his country is also exploring greater cooperation with India in several other sectors including health-care, medicine and aviation. He said the Iraqi government is also looking at increasing flights between the two countries. At present, Iraqi airways operate flights between the two countries.

With the reconstruction of Iraq underway after the clearing of the strongholds of the Islamic State, the envoy urged Indian firms to take up opportunities in areas such as infrastructure, healthcare, education, power generation and pharmaceuticals. About 80,000 Iraqis come to cities such as New Delhi, Pune, Bengaluru and Chennai every year for medical treatment, drawn by lower costs, professional facilities and similarity in culture.

For the second consecutive year, Iraq was India's top crude oil supplier in 2018-19, meeting more than a fifth of the country's oil needs. Official data showed Iraq sold 46.61 million tonnes of crude to India from April 2018 to March 2019, 2% more than the 45.74 million tonnes supplied in 2017-18.

China, Japan, South Korea all these are also major energy consumers of the world. Yes, Asia is the market Japan, Korea, China and India; these are the four major energy market in the world. British Petroleum, Rosneft, L.N. Mittal, Vedanta Resource and several other global companies have invested in a big way in different areas of the energy sector and companies like Total have also shown interest to invest in it. The government has allowed 100 per cent FDI in the energy sector.

Written by: Aastha Pahadia and Kamlesh Ranjan