Thursday, August 28, 2008

China, Iraq reach $3 bln oil service deal

SHANGHAI, China (AP) - China and Iraq have signed a $3 billion deal revising an earlier agreement for China's biggest oil company to help develop the Ahdab oil field, according to a statement from the Iraqi Embassy in Beijing.

The deal, restoring a project canceled after the 2003 U.S.-led invasion of Iraq, was signed late Wednesday by Chinese officials and Iraqi Oil Minister Hussain al-Shahristani.

The revised terms of the deal increase the anticipated output from the billion-barrel field to 110,000 barrels per day from the originally planned 90,000 barrels per day, the statement said. The contract is to run for 20 years after production begins three years from now, it said.

Saddam Hussein's regime defied United Nations sanctions that limited direct foreign dealings with Iraq's oil industry and signed a deal in 1997 with the state-owned China National Petroleum Corp.

That contract, worth $1.2 billion at the time, gave a subsidiary of the Chinese company concessions to develop the field on a production-sharing basis for 22 years. The value for the renegotiated contract is $3 billion, the statement said.

The new agreement will be a service contract, under which China will not be a partner in profits and instead will be paid for its work..........

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