Iraq and U.S energy company, Chevron, seal deal for oil exploration endeavors
In a significant development, Chevron has recently inked a preliminary agreement with the Iraqi government to develop four oil and gas exploration blocks in the Nasiriya project area, located in the southern Dhi Qar province. This agreement was formalized on August 19, 2025, following a meeting between Iraq’s Prime Minister Mohammed Shia al-Sudani and Chevron’s vice president Frank Mount.
This marks Chevron's renewed entry into Iraq's federal upstream oil sector after previous efforts in the early 2020s failed to finalize terms. The contract signals a new Iraqi government approach favouring investment by major international oil companies, especially American firms like Chevron.
The agreement covers four exploration blocks in Nasiriya, including the Balad oil field and other producing fields. The Iraqi oil ministry aims to increase production capacity in the Dhi Qar province, targeting up to 600,000 barrels per day within seven years.
Historically, Chevron operated in Iraq’s northern Kurdistan region but gradually exited after underperforming wells led to relinquishing some blocks by 2023. The new agreement focuses on federal Iraq, expanding Chevron’s involvement in both exploration and development activities.
The deal’s significance is enhanced by Iraq’s shift towards a profit-sharing contract model, replacing less attractive technical service contracts. This shift has encouraged Western majors including TotalEnergies, BP, ExxonMobil, and now Chevron to re-engage. Chevron emphasized its long-term commitment to Iraq, highlighting the country’s opportunities and resources and pledging responsible environmental and community practices.
The agreement comes amidst increasing pressure on Baghdad to be less reliant on Tehran. Iraq, the second-largest producer in OPEC, still depends on Iran for about a third of its electricity needs. The meeting between Mr. Al Sudani and Chevron vice president Frank Mount took place in Iraq, signalling a warm welcome for Chevron's return to work in the country.
This agreement follows a similar one made by US company SLB (formerly known as Schlumberger) in July. No specific details were provided about the potential opportunities or other fields and projects beyond the Balad oilfield for Baker Hughes. Similarly, the agreement with Chevron does not specify the terms or conditions of the exclusive negotiations between Chevron and the Iraqi Oil Ministry.
Iraqi Prime Minister Mohammed Shia Al Sudani announced an agreement in principle with Chevron, affirming that the government has adopted a different approach in dealing with major oil companies and their investments in Iraq, particularly American ones. Mr. Al Sudani spoke of Chevron’s efforts in transferring oil technology to Iraq, and mentioned the company's community contributions and environmental policies in its oil projects.
In summary:
- Agreement date: August 19, 2025
- Scope: Four exploration blocks in Nasiriya + development of Balad oil field and other fields
- Location: Southern Iraq, Dhi Qar province
- Production target: Up to 600,000 barrels per day in seven years
- Contract model: Profit-sharing, more attractive to majors
- Significance: Chevron’s re-entry into federal Iraq’s upstream oil sector after almost a decade, aligned with Iraq’s new approach to international oil investments.
