Sat Oct 28, 2:32 PM ET
China and Iraq are reviving a $1.2 billion deal signed by Beijing and Saddam Hussein's government in 1997 to develop an Iraqi oil field, Baghdad's oil minister said Saturday.
Officials will meet next month to renegotiate the agreement over the al-Ahdab field, said Iraqi Oil Minister Hussain al-Shahristani. He was wrapping up a three-nation tour to secure investment for Iraq's oil industry.
"If agreement is reached very quickly then I expect them to start working right away," al-Shahristani said at a news conference.
China is the world's second-largest oil consumer and has been investing heavily in trying to secure access to foreign supplies.
State-owned China National Petroleum Corp. signed the al-Ahdab deal in the midst of U.N. sanctions that barred direct dealings with Iraq's oil industry. Beijing was waiting for sanctions to end when the U.S. invasion in 2003 overthrew Saddam's government.
The new Baghdad government courted Beijing because Chinese producers have been willing to invest in Angola, Sudan and other countries considered too dangerous or politically isolated.
All other energy contracts signed by foreign producers during the Saddam era also must be renegotiated after Iraqi lawmakers enact a new oil and gas law, which is likely to happen this year.
Beijing had been thought to be out of the running for major contracts in postwar Iraq, with the best deals going to the United States and its allies. But the upsurge in violence there has made the country less attractive to Western producers.
Al-Shahristani said al-Ahdab would be among the first fields offered to foreign bidders, which will need to show technical and financial capability and a proven record in producing oil.
Iraq will need up to $20 billion in investment to develop its oil infrastructure, the minister said.
Al-Shahristani met with Chinese energy officials and executives of the country's four biggest oil companies — CNPC, China Petroleum and Chemical Corp., China National Offshore Oil Corp. and Sinochem Corp.
He said questions about security in Iraq did not come up, because the fields that interest Chinese producers are in the south, where violence is minimal.
He said Iraq also wants to develop areas in its western desert and the Kurdish region in the north.
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