Iraq draws up contract with Chinese state oil company

Iraq prepares to sign a Dh4.4bn oil agreement with the Chinese - its first since 2003.

Iraq is preparing to sign a US$1.2 billion (Dh4.4bn) deal with a Chinese state oil company following months of delays in negotiating contracts with western firms. The proposed deal with a unit of China National Petroleum Corporation (CNPC), which could be signed in the next few days, replaces a cancelled agreement between the company and the government of ousted Iraqi leader Saddam Hussein. Its terms, however, would differ from the earlier deal, which would have given CNPC a long-term stake in future profits from Iraq's Adhad oil field.
"We have held talks with (the Chinese) for a year, and the terms of the deal were changed to a service contract. The Chinese have agreed on that," Hussain al Shahristani, Iraq's oil minister, told the country's Al Noor newspaper. The proposed agreement would be the first major oil deal to be signed by Iraq since the fall of Saddam Hussein's regime in 2003. Western oil companies also have been lining up to participate in rebuilding Iraq's crippled energy sector, but so far have balked at signing short-term service deals instead of more lucrative production-sharing contracts.
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