Iraq, China to sign Saddam-era oil deal

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By | Friday, August 22, 2008

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BAGHDAD(AP) | Iraq and China will sign a deal next week to develop the Ahdab oil field, restoring an agreement that was canceled after the 2003 U.S.-led invasion, an Iraqi spokesman said Thursday.

The governor of Wasit province, where the billion-barrel field is located, left Wednesday for China to join Iraqi Oil Minister Hussain al-Shahristani at the ceremony in the next few days, provincial spokesman Majid al-Atabi said.

"The governor will discuss the logistic cooperation with the Chinese company, especially the security side," Mr. al-Atabi said in a phone interview.

The Shi'ite-dominated Wasit province, about 100 miles southeast of Baghdad, has been the scene of sporadic attacks since the U.S.-led invasion in 2003.

Saddam Hussein's regime defied United Nations sanctions that limited direct 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, gave a subsidiary of the Chinese company concessions to develop the field on a production-sharing basis for 22 years.

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

Once the contract is signed, it will be the first Saddam-era oil deal to be honored by the new Iraqi government. A number of companies say they signed deals with Saddam's regime and demand that those be honored, or the countries involved be given priority on new agreements.

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