Shafaq News/  Members of the Iraqi parliament expressed on Wednesday their rejection of the national "SOMO" company's attempts to conclude a 50 million barrels presale deal of oil at the current market price.

MP of Sairoon, Sadiq Al-Sulaiti, said in a joint press conference with other MPs from the bloc, "The Oil Marketing Company (SOMO) announced offering around 48 million barrels for prepayment sale for the next five years at an initial estimated price equal to the monthly or annual rate of Brent oil for the period preceding the contract date," he warned, "this matter is very dangerous and is rejected for several reasons."

"The current government was formed to prepare for early elections and not to drive the country in suspicious contracts that may shackle the national wealth for years to come."

Al-Sulaiti noted, "in this way, the government will receive money for oil that will be received later from the same share of Iraq in OPEC. Here we wonder what will happen if oil prices and the export rate stabilize at the same level. Certainly, Iraq will export oil and consume nothing in the coming months and years since it received the sums in advance, and this will cause an unprecedented economic disaster."

He pointed out that "SOMO is not a sovereign and financially specialized entity authorized to give Iraqi oil to external parties and put the neck of Iraq in the hands of those companies. This procedure is not mentioned in the company's internal system," he continued.

Al-Sulaiti added that oil wealth is a constitutional right for all the Iraqi people and future generations. No one is allowed to infringe on their rights according to whims and desires to make money without deliberate plans and future accounts.

He pointed out that "the first company SOMO was to strive and persuade OPEC to raise Iraq's share of the exported quantities and to work to reduce transportation and freight costs to achieve increased financial revenues for Iraq."

Al-Sulaiti stressed, "We reject and warn the government against proceeding with such measures and tricks that shackle the country with future commitments made by suspicious parties."

Iraq is preparing to sign a multi-billion dollar contract with the Chinese "ZhenHua Oil", a rescue plan from Beijing for the cash-strapped government that will receive upfront funds for long-term oil supplies.

The deal is the latest example of China, through commercial companies and state-controlled banks, lending struggling oil producers such as Angola, Venezuela and Ecuador, with repayment in barrels of oil instead of cash after the collapse in oil demand and prices strangled Iraq's budget while the government is struggling to pay public sector salaries.

SOMO picked ZhenHua after asking oil traders for bids, according to people familiar with the matter.

The source indicated that the deals were being studied before Prime Minister Mustafa Al-Kadhimi makes the final decision.

Per the terms of the letter SOMO sent to oil traders last month, the winning bidder would buy 4 million barrels per month or about 130,000 barrels per day. They'll pay upfront for one year of supply, which at current prices would bring in more than $ 2 billion. The deal will be valid for five years, but the down payment is only for one year.

All major producers have been affected by the oil collapse due To COVID-19, but Iraq, where crude oil accounts for nearly all the government's revenues, is worse than most countries. Its GDP will shrink by 12% this year, more than any other member of the country.

The prepayment portion of the Iraqi contract is among the largest in recent history, although it is less than the record $ 10 billion that Russian state-run company "Rosneft" collected in 2013.

Besides its size, the deal is rare because it allows the winner to ship Iraqi crude to any destination he wishes for a year. Usually, Middle Eastern crude is sold under strict conditions that prevent traders and refiners from reselling the barrels to different regions.