BEIJING -- Iraq's leader Wednesday is set to begin a weeklong trip to China that underscores both his country's urgent need for help to fix its ailing oil-production system and China's rising stature in the global oil sector.
Iraqi President Jalal Talabani, who is coming to Beijing with a delegation that includes his oil minister, is expected to lobby China to invest in Iraq's oil fields. Plagued by sabotage and theft amid the country's escalating violence, Iraq's oil fields have failed since the U.S.-led invasion in 2003 to return to production levels before the war. Mr. Talabani is expected to appeal for Beijing's help by asking it to revive a Sino-Iraqi oil-exploration deal, valued at $1.2 billion, established during former Iraqi leader Saddam Hussein's rule.
China needs more oil from Iraq and elsewhere to help sustain rising car-ownership rates and searing economic growth that have made China the world's No. 2 oil consumer, after the U.S. Because China imports nearly half of the seven million barrels of oil it consumes a day, the country has been expanding its overseas oil operations, from central Asia to Sudan.
Still, Chinese analysts say Beijing is likely to move cautiously. Chinese oil operations in Africa have suffered killings and kidnappings in recent months, and the rising overseas criticism of the Chinese government -- including calls by activists to boycott the Beijing Olympics in 2008 -- over China's relationship with Sudan, where China is a major oil producer, may make Beijing wary about operating in a place as hazardous and politically sensitive as Iraq.
"Iraq's internal situation is still very tense, and all parties differ widely on how to allocate the country's natural resources," says Zhang Xiaodong, a researcher from the Institute of West Asian and African Studies at the Chinese Academy of Social Sciences. "Under this situation, how would any company dare enter Iraq?"
Mr. Talabani voiced optimism about his visit in an interview with China's state-run Xinhua news agency on the eve of his visit. "I am looking forward to the visit and hope it will open a new phase of the bilateral relations between the two countries," Xinhua quoted Mr. Talabani as saying. Iraqi and Chinese officials also are expected to sign agreements on cooperation on education and health, and to discuss enhanced ties in other areas including training for officials.
Mr. Talabani's trip comes as Iraqi officials continue to squabble over a long-delayed petroleum law that would provide foreign companies a legal framework for entering the country. By some estimates, Iraq has the world's third-largest proven oil reserves. Iraqi officials want to triple oil production by 2015.
Increasing instability and violence are scaring off most Western oil companies, which don't want to send their employees into a war zone. Some analysts think China has a higher appetite for risk because its state-controlled oil companies must place national energy security before employee safety. But the string of high-profile kidnappings of Chinese oil workers in Africa has drawn front-page headlines in China and prompted pointed questions about Beijing's ability to protect its citizens and interests abroad.
"The biggest concern we have is whether we could make sure our Chinese staff working there are safe," said Li Guofu, director of the Research Center on Middle East Issues at the China Institute of International Studies.
The initial deal with Iraq was signed in 1997 by China National Petroleum Corp., parent of Hong Kong- and New York-listed PetroChina Co., to develop the al-Ahdab field. That field could produce 90,000 barrels of crude oil a day, according to the U.S. Department of Energy. Shortly after the war, Iraqi leaders called off all deals signed under Mr. Hussein's government.
China National Petroleum has been criticized recently for its involvement in Sudan, where it is the biggest producer of oil. Activists say China isn't using its influence enough in efforts to end ethnic violence in the country's Darfur region. China has reacted by appointing a special envoy and pressuring the Sudanese government.