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China, Iraq reach three-billion-dollar oil deal: Iraq

BEIJING - China and Iraq have reached an agreement on a landmark three billion dollar deal to exploit oil in the Middle Eastern country, the Iraqi embassy in Beijing said Thursday.

The two sides reached the agreement during a visit to China by Iraqi Oil Minister Hussain Al Shahristani, according to a statement issued by the embassy.

The agreement revives a 1997 contract that granted China exploration rights to the Al Ahdab oil field in the province of Wassit, just south of Baghdad.

Shahristani met earlier this month in Iraq with China's ambassador to Iraq, Chang Yi, to discuss the deal.

After China won exploration rights to the Al Ahdab field, in a deal then valued at 700 million dollars over 23 years, activities were suspended due to UN sanctions and postwar security problems.

Planned oil production was then 90,000 barrels per day, and state-run China National Petroleum Corp (CNPC) had been expected to win the new exploration rights.

Iraq wants to ramp up output by 500,000 barrels per day (bpd) from the current average production of 2.5 million bpd, about equal to the amount being pumped before the US-led invasion of March 2003.

At the end of June, the oil ministry threw open six oilfields and two gas fields for international bidding by 41 companies, the contracts for which are expected to be signed in June next year.

The deals, which are service contracts only, pave the way for energy firms based abroad to return to Iraq 36 years after Saddam Hussein threw them out.

CNPC declined comment Thursday on the revived deal.