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China Set to Bail Out Iraq With Multibillion-Dollar Oil Deal

  • State-owned ZhenHua is said to win bid for prepayment contract
  • Five-year deal still needs final approval from prime minister
A petrochemical oil refinery.
Photographer: Toru Hanai/Bloomberg
Updated on

Iraq is poised to sign a multibillion-dollar contract with China ZhenHua Oil Co., a bailout from Beijing for the cash-strapped government which will receive money upfront in exchange for long-term oil supplies.

The deal is the latest example of China, via state-controlled trading companies and banks, lending to struggling oil producers such as Angola, Venezuela and Ecuador, with repayment in the form of oil barrels rather than cash. This year’s crash in oil prices has hammered Iraq’s budget and the government has failed to pay teachers and civil servants on time.