The agreement will be among deals expected at the China International Import Expo during Nov. 5-10, to be attended by thousands of foreign companies and Chinese buyers to demonstrate the importing potential of the world’s No. 2 economy.
The joint venture between SOMO and Zhenhua, which has been under negotiations for months, will help bolster Iraq’s position in Asia, the world’s biggest and fastest-growing oil-consuming region.
Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries.
Zhenhua Oil, a subsidiary of China’s defense conglomerate Norinco, is also expected to renew at the expo an annual crude oil supply agreement for 2019 with Saudi state-run oil and gas firm Aramco.
The Zhenhua-SOMO deal will give China another crude supply option as the country is under pressure to cut oil purchases from Iran, OPEC’s third-largest producer, as the United States is set to re-impose sanctions on Tehran on Monday.
China’s Iraqi crude oil imports rose to 32.28 million tons in the first nine months of the year, or 863,000 barrels per day, 15% more than in the same period last year.