Iraq signs oil contract with Chinese-led group

Jan 27, 2010, 16:12 GMT

Baghdad - Iraq on Wednesday signed a contract with a Chinese-led consortium to develop the Halfaya oil field in southern Iraq, the Oil Ministry announced.

The China National Petroleum Company (CNPC) has a 50-per-cent share in the group, Malaysian state firm Petronas and France's Total, which each hold 25-per-cent shares in the group, in December won the rights to develop the Halfaya oil field, thought to contain reserves of 4.1 billion barrels.

The group committed to raise production from 3,000 barrels per day (bpd) to 535,000 bpd.

Announcing the deal, Al-Shahristani said that he was 'happy' that Iranian forces had withdrawn from an oil well on the nearby al-Fakkah oil field.

'I am happy with this. We did not lose a single drop of oil from this field. Production did not stop during the conflict with the Iranian side last month,' al-Shahristani said.

In December, Iranian soldiers briefly raised the Iranian flag over the No. 4 oil well on the field, which runs along the two countries' disputed border, before withdrawing from the well following protests in several Iraqi cities.

The Iraqi government, which relies heavily on oil exports for its revenue, hopes foreign investment will boost oil output to 12 million bpd up from the current 2.5 million bpd.

Iraq's proven reserves stand at 115 billion barrels, the third largest in the world after Saudi Arabia and Iran.

Last week, the Oil Ministry announced that oil revenues went up by 300 million dollars during the last month of 2009, to hit 4.5 billion dollars.