Chevron Corporation (CVX Quick QuoteCVX - Free Report) , a Houston, TX-based integrated oil and gas company, has officially re-established its presence in Iraq by signing an agreement in principle with the country’s Ministry of Oil. Under the direction of prime minister Mohammed Shia Al Sudani, the agreement was made public on Tuesday and describes Chevron's involvement in the development of the Nassiriya project, which encompasses the Balad oilfield, four exploration blocks and other potential upstream ventures throughout Iraq, according to Reuters.

Enhanced energy production, sophisticated technology transfer and sustainable development in the southern Dhi Qar governorate and beyond are made possible by this agreement, which signifies a renewed cooperation between Iraq and one of the biggest oil and gas firms in the world.

Chevron’s Return to Iraq After Years of Absence

Chevron’s participation in the Nassiriya oilfield commenced in 2009 when it collaborated with rivals Eni (E Quick QuoteE - Free Report) , Repsol (REPYY Quick QuoteREPYY - Free Report) and Nippon Oil to submit a bid for the oilfield. Despite serious interest, negotiations failed to produce a final award at the time, leaving the Nassiriya opportunity on hold.

The new agreement reflects a strategic shift in Iraq’s approach to international oil companies. Prime minister Al Sudani emphasized that his government has adopted a “different approach” in dealing with global energy giants, particularly American firms, signaling a more open and investor-friendly environment.

Chevron executives, including vice president Frank Mount, were present at the signing ceremony alongside oil minister Hayan Abdul-Ghani al-Sawad, underscoring the significance of this renewed collaboration.

Unlocking the Nassiriya Oilfield’s Potential

The Nassiriya oilfield represents one of Iraq’s most important untapped energy assets. According to data from previous studies and a 3D seismic survey, the field contains an estimated 4.36 billion barrels of proven oil reserves. This makes Nassiriya not only a vital project for Chevron but also a cornerstone in Iraq’s strategy to expand oil production capacity in the coming years.

Alongside Nassiriya, Chevron will also develop the Balad oilfield, which adds to its growing footprint in Iraq’s southern oil-rich territories. Both projects are expected to bolster production levels, increase exports and bring much-needed investment into local communities.

Strategic Role of Gas Development and the GGIP

A key component of the agreement involves natural gas. Associated gas produced from Nassiriya and the nearby Gharraf field will be captured and integrated into the Gas Growth Integrated Project (“GGIP”), led by TotalEnergies SE (TTE Quick QuoteTTE - Free Report) .

The GGIP is a cornerstone of Iraq’s energy transition, aimed at reducing the country’s heavy reliance on imported electricity. By capturing flared gas from three major oilfields and converting it into fuel for domestic power plants, the project seeks to improve Iraq’s energy security and cut dependence on costly imports from Iran, which currently supplies nearly a third of the former’s electricity needs.

Chevron’s expertise in gas recovery and environmental management is expected to complement the GGIP, reinforcing its role in supporting Iraq’s broader energy diversification strategy.

Technology Transfer and Environmental Commitments

Chevron’s return to Iraq is not solely about boosting oil production. The company has committed to advancing technology transfer, community contributions and adherence to strong environmental policies. Prime minister Al Sudani highlighted these aspects during the signing, stressing that Chevron’s approach aligns with Iraq’s development goals.

By introducing cutting-edge oilfield technology, Chevron will help modernize Iraq’s upstream operations, improve efficiency and reduce emissions. Its track record in environmental stewardship and corporate social responsibility will also play an important role in building local trust and fostering long-term partnerships.

Boosting Iraq’s Oil and Gas Sector

As the second-largest producer in OPEC, Iraq holds vast energy potential but continues to face challenges in infrastructure, electricity shortages and attracting foreign investment. Chevron’s return marks a major step in addressing these issues.

The agreement paves the way for exclusive negotiations between Chevron and Iraq’s Ministry of Oil, creating a framework for exploration and development projects. This structured approach will help Iraq attract additional international investment while ensuring that key projects, such as Nassiriya, move forward efficiently.

Economic and Geopolitical Implications

Chevron’s re-entry into Iraq carries significant economic and geopolitical weight. For Iraq, it means renewed confidence from global investors, increased production capacity and enhanced power supply. For Chevron, the agreement represents an opportunity to expand its Middle East footprint at a time when the region remains central to global oil supply.

The deal also highlights growing U.S.-Iraq energy ties, with Washington encouraging American companies to invest in the latter’s energy sector as part of broader economic cooperation. Iraq's collaboration with Chevron highlights its effort to balance long-standing relationships with Asian and regional investors while strengthening ties with Western companies.

Outlook for Iraq’s Energy Future

The moves in Nassiriya and Balad mark the beginning of Chevron’s growing footprint in Iraq. As exploration advances and reserves are tapped, Iraq’s production levels could rise substantially, strengthening its role in global oil markets.

Moreover, the integration of associated gas into the GGIP offers a pathway toward cleaner energy production and a more resilient power supply, helping Iraq reduce its reliance on imports and cut greenhouse gas emissions.

Chevron’s involvement sets a precedent for how Iraq can partner with international oil companies in a manner that balances profitability, sustainability and community impact. With vast reserves, strategic location and government support, Iraq is positioned to attract further global investment.

Conclusion

Chevron’s agreement with Iraq represents a turning point for both parties. By re-entering through the Nassiriya and Balad projects, the company is not only unlocking billions of barrels of proven oil reserves but also supporting Iraq’s energy diversification strategy. By implementing gas capture projects, facilitating technology transfer and committing to environmental sustainability, Chevron is set to become a transformative force in Iraq’s energy future. As Iraq seeks to boost its production capacity and modernize energy infrastructure, Chevron’s return could prove to be one of the most significant developments in the Middle East’s oil and gas sector in recent years.

Zacks Rank and Key Picks

Currently, CVX carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Repsol, which sports a Zacks Rank #1 (Strong Buy), and Eni, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Repsol is a global energy company known for its integrated operations spanning exploration, production, refining, and marketing of oil and gas. It actively pursues innovation and sustainability initiatives to transition toward cleaner energy solutions while maintaining a strong presence in key international markets. Repsol is valued at $18.15 billion. 

Eni is an Italian multinational energy company involved in oil, natural gas and renewables, with operations in more than 60 countries. Headquartered in Rome, Eni is transitioning toward sustainable energy with a strong focus on decarbonization. Eni is valued at $58.98 billion.