Iraq, China discuss reviving Saddam-era oil deal
02:22, Thursday, 28 September 2006
By Ahmed Rasheed
BAGHDAD, Sept 27 (Reuters) - Iraq could hand China the first
foreign contract to develop its vast oil resources if Beijing
agrees to put into effect a deal originally signed with Saddam
Hussein, Iraq's Oil Ministry said on Wednesday.
While U.S. oil majors, excluded from Iraq before the U.S.
invasion in 2003, wait for Iraq to pass new laws on the sector
before investing, Oil Minister Hussain al-Shahristani will visit
China, Japan and Australia shortly to discuss projects and
developing exports, ministry spokesman Asim Jihad told Reuters.
"The minister will discuss with Chinese companies fulfilling
previous contracts signed with the former regime," he said.
He declined to give specific dates for the trip.
Iraqi oil officials have previously said they believe China
will agree to develop the 90,000-barrel per day (bpd) Ahdab
field in south central Iraq as the first project since the war.
The field, with an estimated development cost of $700
million, was awarded to China National Petroleum Corp and
Chinese state arms manufacturer Norinco <000065.SZ> by Saddam.
The deal, like others signed by Saddam, was effectively
frozen by international sanctions and then Saddam's overthrow.
Several wells are already delineated, however, although
there is no production from Ahdab at present. A second field,
East Baghdad, is also slated for priority development.
The four-month-old government has given priority to Ahdab
because of its proximity to new power stations and refineries.
The ministry has previously said it expects output to increase
from 30,000 bpd to a full capacity of 90,000 over two years.
"The visit comes while the oil investment law is waiting to
be approved by parliament," Jihad said of Shahristani's tour.
Iraqi ministers have said they hope to see legislation by
the end of the year setting down the terms on which foreign
companies can invest in hydrocarbon resources to help Iraq
develop its war- and sanctions-ravaged oil industry.
(Additional reporting by Alastair Macdonald)
((Writing by Alastair Macdonald, editing by Janet McBride))
Keywords: ENERGY IRAQ CHINA
(c) Reuters Limited 2006
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