SINGAPORE/BAGHDAD: While global oil giants scale back operations in Iraq, a new group of players is quietly filling the gap. Independent Chinese oil companies are expanding rapidly in the country, drawn by new profit-sharing contracts and opportunities that larger firms have passed up.

Once overshadowed by China's massive state-run oil companies, smaller players like Geo-Jade Petroleum, United Energy Group, Zhongman Petroleum, and Anton Oilfield Services are stepping into Iraq's energy sector with big ambitions. Collectively, they aim to double their oil output in the country to 500,000 barrels per day by 2030, according to company executives.

Iraq, OPEC's second-largest producer, is under pressure to ramp up oil production and attract fresh investment. Its recent shift from fixed-fee contracts to profit-sharing agreements has opened the door for nimbler, lower-cost operators.

"They are known for rapid project execution, strict adherence to timelines, and a high tolerance for operating in areas with security challenges," said Ali Abdulameer of the state-run Basra Oil Co. "Doing business with the Chinese is much easier and less complicated compared to Western companies."

Executives from Chinese independents say Iraq's improved political stability and growing openness to private investment make it a key growth market. The country is targeting an output boost of more than 50 percent to exceed 6 million bpd by 2029. While China's CNPC remains the dominant producer in Iraq, independents are carving out a growing share of the pie.

The independents' ability to move quickly—and accept lower profit margins—has helped them win key contracts. In 2023, they secured half the blocks offered in Iraq's exploration licensing round. In May, a Geo-Jade-led consortium agreed to invest US$848 million in the South Basra project, including reviving the Tuba field and building a 200,000-bpd refinery.

"Chinese independents have much lower management costs compared to Western firms and are also more competitive versus Chinese state-run players," said Geo-Jade CEO Dai Xiaoping. The firm plans to ramp up production at Tuba to 40,000 bpd by mid-2027, with longer-term plans for a petrochemical complex and two power stations.

The independents have also significantly reduced development costs. According to Dai, the cost to drill a well in a major Iraqi field has fallen to $4 to 5 million, about half the price from a decade ago.

But not everyone is enthusiastic. Muwafaq Abbas, a former crude operations manager at Basra Oil, warned that Iraq's technological advancement goals could suffer. He pointed to concerns about transparency, heavy reliance on Chinese labor, and the limited role of Iraqi workers in some projects.

Still, the appeal of fast, affordable execution remains strong. Zhenhua Oil, a smaller state-run Chinese firm, is targeting 250,000 bpd by 2030 at the Ahdab oilfield. Zhongman Petroleum, meanwhile, plans to invest $481 million in blocks it won last year.

Western firms aren't entirely out of the picture: TotalEnergies announced a $27 billion investment in 2023, while BP is preparing to spend up to $25 billion in Kirkuk.