Chinese company wins $2 billion oil prepayment deal, says Iraq’s SOMO chief

File – Laborers walk in the Nihran Bin Omar field north of Basra. (AP)

SULAIMANI (ESTA) — A Chinese company has won $2 billion oil prepayment deal with the Iraqi government, head of Iraq’s state-oil marketing company said.

Bloomberg reported last month that Iraq would sign a multibillion-dollar contract with China ZhenHua Oil Co., receiving money upfront in exchange for long-term oil supplies.

SOMO General Manager Alaa al-Yasiri said in an interview with state news agency INA published on Saturday that the company had chosen a Chinese firm after receiving bids from several traders.

“Iraq got $2 billion at zero interest with a premium over the price,” INA quoted Al-Yasiri as saying, according to Bloomberg.

“There was intense competition between two European and Chinese companies, and the Chinese company won,” he added.

The winning bidder will buy 4 million barrels per month, or about 130,000 a day, according to terms of a letter SOMO sent in November, Bloomberg reported. The deal runs for five years – but the upfront payment is only for one year.

Iraq, OPEC’s second-largest producer of crude, is facing an economic crisis over falling of oil prices and an OPEC+ agreement to cut production by more than one million barrels per day as well as the coronavirus pandemic.

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