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Mon 11 Aug 2008 01:18 AM

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Iraq, China ready to revive major oil deal

Original 1997 contract for Al-Ahdab field valued at $700mn over 23 years.

Iraq's oil ministry said Sunday it plans to resurrect a major oil deal with China that fell apart amid crippling United Nations sanctions and the aftermath of the 2003 US-led invasion.

Oil minister Hussein Al-Shahristani met with Chinese ambassador Chang Yi to revive the 1997 contract that granted China exploration rights to the Al-Ahdab oil field in the province of Wassit, just south of Baghdad.

"Iraq and China are concerned with completing the agreement to develop Al-Ahdab oil field," a statement from the Iraqi oil ministry said.

The construction of a power station in the province's Al-Najibia was also discussed, Assim Jihad, a spokesman for the ministry told newswire AFP, adding that an Iraqi delegation would travel to China in the next few days to work on the terms.

After China won exploration rights to the Al-Ahdab field in 1997, in a deal then valued at $700 million over 23 years, activities were suspended due to UN sanctions and postwar security problems.

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

The meeting in Baghdad came after Iraq announced Friday that it was resuming exploration of its immense oil reserves after a break of nearly 20 years.

Iraq wants to ramp up output by 500,000 barrels per day 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.

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