Multiple American majors are negotiating new investment agreements to (re)enter Iraq, including ExxonMobil, Chevron, and ConocoPhillips.
The interesting question, though, is why now? Iraq has had to shut in significant production due to the ongoing conflict in Iran and the closure of the Strait of Hormuz, but there are still investment draws that seem to appeal to American oil leaders.
As American shale plateaus and exploration efforts continue to seek the next big-win country like Guyana, Iraq offers a unique opportunity for international oil companies to access discovered oil and gas resources for long-term growth. Furthermore, by inviting American companies to return, the Iraqi government might be playing a geopolitical balancing act with the world’s two most powerful nations – the United States and China.
Investment Appeal: A Major Resource-Holding Country with an Open Door
Iraq is the fifth largest oil-producing country in the world. In 2025, it produced 4.3 million barrels of crude per day, ranking behind the United States (13.6 million barrels per day), Russia (10.2), Saudi Arabia (9.7), and Canada (5.3).
It also ranks fourth globally for proven reserves with 145 billion barrels, behind only Venezuela (303 billion barrels), Saudi Arabia (298), and Iran (158), according to the latest Statistical Review of World Energy report by United Kingdom’s Energy Institute.
For publicly-traded companies, the reserve-to-production (aka R/P) ratio is a critical valuation parameter. An R/P ratio above 10 years is typically considered healthy. In the United States, shale oil reserves are quantified somewhat differently than conventional oil reserves. Furthermore, the proven reserves are not purely technical numbers; they also depend on prevailing oil prices. The higher the oil prices, the higher economically-recoverable reserves there might be. As the tier-1 shale inventory continues to reduce, some experts believe U.S. shale production could be reaching its production plateau, if it hasn’t already.
Saudi Arabia, Kuwait, Russia, and Iran have ample proven oil reserves, but they are not accessible for international companies as equity investors. Saudi Arabia and Kuwait treat oil reserves as national priorities. Their national oil companies are developing their oil reserves, while occasionally welcoming service companies to assist technically, or international oil companies on service contracts. Russia had a number of western IOCs invest in its oil and gas until its invasion of Ukraine in 2022. Once the war began, all the IOCs, except TotalEnergies, pulled out.
Venezuela is quickly becoming a new investment possibility, though the political uncertainty that has followed former President Nicolas Maduro’s capture has made oil deals tough to close. Oil majors don’t want to rush into a country without legal and fiscal predictability. After all, Venezuela nationalized IOCs’ assets in the country less than 20 years ago. The smaller independents and private companies seem to be making some progress. For example, Hunt Oil signed an oil agreement with PDVSA on Aug. 18.
Mixed Results from the Last Opening in Iraq
After the Saddam Hussein regime toppled in 2003, Iraq opened its oil sector for international investment. International companies from the West, China, and Russia came to lead development and production of major oil fields at the time.
ExxonMobil became the operator for the giant West Qurna 1 field; Shell took the lead to develop the Majnoon field; and BP led development of the Rumaila field. Russia’s Lukoil became the lead operator for West Qurna 2.
As was often the case back then, China sent in one leading company, China National Petroleum Corporation, to spearhead its efforts in accessing Iraqi oil fields, rather than sending multiple Chinese companies to compete against each other in the same country. A bid round was held in 2009, and at the time, CNPC had partnered with multiple IOCs, such as BP in Rumaila, Shell in Majnoon, and ExxonMobil in West Qurna 1. It was also the operator for the Halfaya field, with partners Total from France and Petronas from Malaysia.
From 2010 to 2019, Iraqi oil production grew steadily from 2.4 million barrels per day to 4.7 million. However, during the past three years, Iraqi oil production has declined year-on-year to its current 4.3 million barrels per day. This is likely among the reasons that the Iraqi government is inviting western IOCs to return.
Shell left the West Qurna and the Majnoon fields in 2018, and ExxonMobil officially exited the West Qurna 1 field in 2024. BP chose to stay in the Rumaila field, but it formed a joint venture with CNPC under the name of Basra Energy Co., with the Iraqi national company. It intends to stay until the contract ends in 2034. CNPC has become the dominant foreign company in Iraq.
Now, Iraq has almost no exploration risk, with many multiple billion barrels of oil fields already discovered. Thus, its fiscal terms are comparatively stringent. If oil prices are sufficiently high, investors can still make healthy returns. However, if oil prices hover around (or drop below) $50 per barrel, it could become very difficult for the IOCs to make money.
Recent Deals
BP signed a development contract in early 2025 to develop the 3-billion-barrel Kirkuk oil field in 2027. The field was initially discovered by the British major almost 100 years ago.
Chevron – the American major that did not enter Iraq during the 2009 bid round – signed a preliminary agreement in February 2026 to replace Lukoil to develop the West Qurna 2 field. The Russian private company has been under Western sanctions and is being forced to exit the project.
ExxonMobil is also in negotiations with the Iraqi government to invest in the Majnoon supergiant field, formerly under Shell’s operatorship. A heads of agreement was signed in October 2025 in Baghdad. ExxonMobil said: “We are pleased to have signed an HOA with the Iraqi Oil Ministry to evaluate exploration, development, and oil marketing opportunities in Iraq.”
The third-largest American oil company, ConocoPhillips, also recently signed a farm-in agreement to join BP in the development of the Kirkuk field.
Transportation Bottleneck
Iraq sits on the northwestern corner of the Persian Gulf and has been among the most negatively affected oil producers in the Middle East since the war in Iran broke out in February and the Strait of Hormuz closed.
Before the war, about 20 million barrels of oil per day passed through the Strait. An estimated 10-to-14-million-barrels per day of production was lost due to the Strait’s closure. Iraq is estimated to have lost between 2.2-to-2.5-million barrels per day of oil production, more than half of its total production. The Iraqi government went to the extreme measure of selling its crude with a roughly $20-per-barrel discount, if any buyer was willing to take delivery.
Iraq has limited access to the European market via the Iraq–Turkey oil pipeline, though it is not operating at its full capacity of 500,000 barrels per day.
Additionally, with the transitional government in Syria, the country offers a new transit possibility via a potential oil pipeline from Iraq to the Mediterranean Sea. Chevron and potential partners are reportedly in negotiations with the Iraqi government to take the lead in a new Iraq-Syria oil pipeline. Chevron is one of the few IOCs willing to invest in oil pipelines, as it did in the CPC pipeline in Kazakhstan, as long as it can link to its operating oil fields to help unlock value.
Looking Ahead
The ExxonMobil and Chevron deals are not yet finalized. The new Iraqi Prime Minister Ali al-Zaidi took office on May 14, 2026, reportedly with a friendly relationship with the Trump administration, which might impact negotiations.
Iraq certainly has the oil resources and is open to foreign investments, but key questions remain:
Will the Iraqi government be able to offer attractive enough terms to (re)entice ExxonMobil and Chevron?
What role will Chinese companies, especially CNPC, play in the new environment? After all, China is by far the biggest importer of Iraqi oil.