Iraq, China discuss reviving Saddam-era oil deal

BAGHDAD, Sep 27 (Reuters) Iraq could hand China the first foreign contract to develop its vast oil resources if Beijing agrees to put into effect a deal originally signed with Saddam Hussein, Iraq's Oil Ministry said on Wednesday.

While U.S. oil majors, excluded from Iraq before the U.S.

invasion in 2003, wait for Iraq to pass new laws on the sector before investing, Oil Minister Hussain al-Shahristani will visit China, Japan and Australia shortly to discuss projects and developing exports, ministry spokesman Asim Jihad told Reuters.

''The minister will discuss with Chinese companies fulfilling previous contracts signed with the former regime,'' he said.

He declined to give specific dates for the trip.

Iraqi oil officials have previously said they believe China will agree to develop the 90,000-barrel per day (bpd) Ahdab field in south central Iraq as the first project since the war.

The field, with an estimated development cost of 0 million, was awarded to China National Petroleum Corp and Chinese state arms manufacturer Norinco by Saddam.

The deal, like others signed by Saddam, was effectively frozen by international sanctions and then Saddam's overthrow.

Several wells are already delineated, however, although there is no production from Ahdab at present. A second field, East Baghdad, is also slated for priority development.

The four-month-old government has given priority to Ahdab because of its proximity to new power stations and refineries.

The ministry has previously said it expects output to increase from 30,000 bpd to a full capacity of 90,000 over two years.

''The visit comes while the oil investment law is waiting to be approved by parliament,'' Jihad said of Shahristani's tour.

Iraqi ministers have said they hope to see legislation by the end of the year setting down the terms on which foreign companies can invest in hydrocarbon resources to help Iraq develop its war- and sanctions-ravaged oil industry.

REUTERS BDP RK2230