Iraq, China form committee to review oil deal

BAGHDAD, Nov 1 (Reuters) Iraq and China will review an oil deal signed under Saddam Hussein as Iraq prepares to seal the first foreign contract to develop its vast oil resources, Oil Minister Hussain al-Shahristani said on Monday.

He said the two countries had formed a committee to look again at China's contract to develop the 90,000 barrels per day Ahdab oilfield in south central Iraq.

The committee, which will include three or four people from each side, will review the articles of the contract to ''serve Iraq's interests'', Sharistani added.

It will meet on November, he said.

Iraq's oil industry is in urgent need of billions of dollars in foreign investment after years of sanctions and war.

Ahdab, with an estimated development cost of 700 million dollars, 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.

Iraq's crude oil exports in October were between 1.6 and 1.7 million barrels per day, Shahristani said.

Iraq exported 1.64 million bpd in September, according to shipping sources. The same sources put October exports a shade above 1.5 million bpd.

Shahristani told a news conference production in October was 2.3 million bpd and his ministry aimed to boost output to 2.9 million bpd by the end of 2006.

''We are aiming to reach 2.9 million bpd by the end of this year by producing 2.25 million bpd from the south and around 700,000 from the north,'' he said.

REUTERS SP VV1826