Iraq's Ministry of Industry and Minerals has signed three memoranda of understanding (MoUs) with China’s SEPCO to advance major industrial developments in Karbala, including the construction of petrochemical facilities and infrastructure works, the Ministry of Industry and Minerals reported on April 20.

As its trade with the US continues to deteriorate, China seeks to diversify its energy imports through Iraqi oil, securing its energy requirements. Chinese firms now play key roles across 50-67% of Iraq's oil sector. This economic leverage represents the foundation of Beijing's growing weight in Iraq, supported by solid diplomatic ties despite limited security involvement. Iraq has received significant contracts from Chinese companies on the back of several deals. 

The agreements were signed between SEPCO (Shandong Electric Power Construction Corporation), a subsidiary of Power China, and Al-Yusra Industrial, the developer of Karbala Industrial City.

The MoUs cover the establishment of four petrochemical plants, infrastructure development and the operation and maintenance of key production units.

Iraq’s Minister of Industry and Minerals, Khaled Battal Al-Najm, and the Governor of Karbala attended the signing ceremony.

Speaking at a press conference held on the sidelines of the event, Battal stated: “The industrial city in Karbala will significantly reshape the province’s industrial landscape in the near future, with potential benefits extending to other regions across Iraq.”

The Karbala Industrial City, dedicated to petrochemical industries, spans more than 5,000 dunams (approximately 1,235 hectares), with over 60% of its infrastructure reportedly completed.

Battal highlighted ongoing discussions with SEPCO and Al-Yusra Industrial regarding implementation challenges, particularly electricity supply, and pledged to follow up with the Ministries of Electricity and Oil in Baghdad.

“A distinctive feature of this project is that the development company will manage the power supply for all industrial plants, with surplus electricity redirected for use in surrounding areas,” Battal said. He also noted the city’s favourable location, situated just three kilometres from the planned Development Road corridor and close to the Karbala Refinery.

SEPCO, founded in 1952, is a state-owned engineering and construction enterprise under Power Construction Corporation of China. With $1.7bn in assets, it specialises in power generation, petrochemical, oil and gas, and renewable energy sectors.