[A-List] Iraq Revives Saddam Deal with China

[Yoshie Furuhashi]

<http://www.ft.com/cms/s/c6c6f958-2108-11dc-8d50-000b5df10621.html>
Iraq revives Saddam deal with China

By Jamil Anderlini in Beijing and Steve Negus, Iraq Correspondent

Published: June 22 2007 23:08 | Last updated: June 22 2007 23:08

Baghdad has revived a contract signed by the Saddam Hussein
administration allowing a state-owned Chinese oil company to develop
an Iraqi oil field, the Iraqi oil minister told the Financial Times in
Beijing on Friday.

Hussein al-Shahristani also said Baghdad welcomed Chinese oil company
bids for any other contract in the country through a "fair and
transparent bidding process" to be laid out in the new oil law under
discussion in Iraq's parliament.

China National Petroleum Corporation, the country's largest oil
company and the parent of listed group Petrochina, signed a deal with
Iraq in 1997 to develop the al-Ahdab oil field. The field is one of
the first to be offered to foreign investors since the 2003 US-led
invasion.

Iraq has been reluctant to revive Saddam-era contracts, but seems to
have turned to China as security problems and uncertainties over Iraqi
investment law have deterred other investors.

The field had an estimated pre-war capacity of 90,000 barrels a day
and the 1997 contract was valued at about $1.2bn (€900m, £600m). "The
contract with the previous administration is still valid – it was
signed and we will honour it," Mr al-Shahristani said. "We have been
talking since I visited China eight months ago and the Chinese have
just submitted a revised proposal to meet the new technical
requirements for oil field development laid out by the Iraqi
government."

He said there were still some technical details to work out but that
the two sides would begin discussing revised commercial terms and
price details "within one month". It was too early to put a dollar
value on the revised contract.

US diplomats in Beijing said they were not aware that the deal had been revived.

The breakthrough on the contract was made during a weeklong visit to
China by Jalal Talabani, Iraqi president, last month. Mr Talabani met
his counterpart, Hu Jintao, and Wen Jiabao, the premier, and signed a
number of agreements on topics such as oil, trade, commerce, education
and cultural exchange.

During the visit China said it would cancel a "large margin" of Iraqi
debt, although no specific figures were released. Mr Talabani was
quoted prior to his visit as saying he would like to see $8bn of debt
to China cancelled.

Officials from the state-owned Chinese refiner Sinochem said the
company had no plans to invest in Iraq and was waiting for new Iraqi
oil legislation to be passed into law.

"The Iraqis told us we will be able to bid in an open and transparent
system under the new legal framework," said one senior Sinochem
official. "That law will be very important."

-- 
Yoshie