An agreement was signed between the Iraqi government and the Chinese Export and Credit Insurance Corporation (SINOSURE) to finance an amount of (10) billion US dollars for Iraq for infrastructure projects nominated by the Iraqi government.

The term of the agreement is (20) years from the date of its entry into force in 2019. Moreover, the aforementioned financing amount will be recovered in crude oil that will be raised by two Chinese companies according to the standards approved by SOMO and applied to all buyers of Iraqi crude oil.

As for the SOMO oil lifting portion, it has been in effect since 2019 and is still in effect with a volume of (100) thousand barrels/day, distributed equally between Zhenhua Oil Company and Sinochem. The aforementioned volume was increased to (150) thousand barrels/day in 2022 to meet the estimated annual revenues based on the official selling price (OSP) applied to all buyers (and no discounts or installments apply to it).

The crude oil sales contracts signed pursuant to the aforementioned agreement also allow for the resale of the allocated quantity, provided that the profits resulting from the resale are 65% for SOMO and 35% for the Chinese company. However, if the resale activity results in a loss, the Chinese company will bear 100% of the loss. The terms and conditions of the above contracts include a strict mechanism for on-the-job training for SOMO employees and for monitoring and auditing every step taken to complete the optimal resale transaction based on market data. 

The proceeds from the sale of the quantities of crude oil allocated under this Agreement shall be deposited directly into Iraq’s account at the Development Fund for Iraq and shall be used as guaranteed deposits for the amount financed by the Agreement.