Iraq and Saudi Arabia to sign deals worth billions of dollars

Baghdad in talks with Saudi Aramco and Acwa Power for potential energy projects

Saudi Arabia's King Salman bin Abdul Aziz Al Saud meets with Iraqi Prime Minister Mustafa Al-Kadhimi, in Riyadh, Saudi Arabia March 31, 2021. Saudi Press Agency/Handout via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY

Iraq and Saudi Arabia, Opec’s two biggest producers, are set to finalise multibillion-dollar deals in energy, petrochemicals and water, Iraq’s state-run newspaper said on Monday.

The deals would be a major step towards weaning the war-battered country off Iranian energy imports and further boosting relations between the two neighbouring countries.

Oil minister Ihsan Abdul-Jabbar Ismaael said his country intends to sign major deals with Saudi Arabia before the end of this government term, Al Sabah quoted him as saying.

Mr Ismaael, who also leads the Iraqi team in the negotiations, did not disclose the size of the deals but said the total investment would be worth “tens of billions”, the newspaper said.

The deals come as relations between the two countries warm up. Saudi Arabia severed ties with Iraq after Saddam Hussein's invasion of Kuwait in 1990.

The two countries started restoring relations in 2016 with US assistance, in an attempt to counter Iran's growing influence. Saudi Arabia also reopened its embassy in Baghdad, while the countries set up a co-ordination council to upgrade ties. They have since signed a series of agreements relating to politics, security and commerce, leading to opening a major border crossing.

Baghdad is also discussing partnership deals with Saudi Aramco to explore and develop natural gas reserves from new fields in the western desert of Iraq, the newspaper reported. Talks are continuing with Saudi Arabia's Acwa Power to build water desalination plants and solar energy stations in Iraq.

“Experts from both countries are studying the outcomes of the negotiations in order to agree on the drafts of the long-term contracts that satisfy the aspirations and interests of the two countries,” the minister was quoted as saying.

Saudi Arabia is not the only Gulf country that is strengthening ties with Iraq. The UAE last month signed a deal with Iraq to promote and protect mutual investments as Emirati companies seek to increase their investments in sectors, such as clean energy and logistics, in the country.

Energy company Masdar signed a deal with Baghdad’s Ministry of Electricity and National Investment Commission in October to build five power stations in Iraq.

Meanwhile, Abu Dhabi Ports Group signed a preliminary agreement last month with the General Company for Ports of Iraq (GCPI), to explore potential investment opportunities and strengthen co-operation in transportation and maritime sectors.

Updated: November 1st 2021, 10:07 AM
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