Iraq signs first oil contract with foreign consortium in 36 years

Baghdad, Nov 3 : The government of Iraq Tuesday signed a contract with a Chinese-British consortium to develop southern Iraq's massive Rumaila oil field, a spokesman said.

Iraqi oil ministry spokesman Assim Jihad told the DPA that the contract, Iraq's first with a foreign firm since Iraq nationalised its petroleum resources in 1972, was signed in the presence of Iraqi Oil Minister Hussein al-Shahristani and the Chinese and British ambassadors.

The one million barrels of oil per day (bpd) that the Rumaila oil field produces already account for roughly half of Iraq's total production of 2.5 million bpd. British Petroleum (BP) and China's CNPC promised to increase production from the field to 2.85 million bpd.

BP and CNPC will be paid $2 per barrel produced, an oil ministry spokesman said.

The 20-year contract for the field - which contains an estimated 17 billion barrels of oil, or twice Azebaijan's total reserves - carries risks for the consortium.

While the region around Rumaila and the southern city of Basra is mostly secure, there is real domestic opposition to foreign oil companies' re-entrance to the market.

The Iraqi Federation of Oil Unions has opposed the contracts, and has threated to strike if they were approved. It also remains unclear whether future governments, including the one to be chosen in the next January's elections, will honour contracts signed now.

--IANS