By Mariam Karouny2 hours, 45 minutes ago
China and Japan have staked their claim to develop Iraq's vast oil reserves with Tokyo offering billions of dollars in loans and Beijing agreeing to renegotiate a deal signed with Saddam, Iraq's oil minister said Wednesday.
Hussain al-Shahristani was briefing reporters after a tour of Asia that took in the world's second biggest oil consumer China and its third biggest Japan -- both heavily dependent on imports and keen to secure future energy supplies.
Iraq, which has the world's third largest oil reserves, is in urgent need of billions of dollars in foreign investment after years of sanctions and war crushed the industry.
The Baghdad government is working toward its first foreign oilfield development contract and is readying a legal framework.
All the big oil companies are eyeing deals.
Energy-hungry Asian firms, whose home governments are less concerned about transparency and good governance than the West, are already snapping up oil blocks in Nigeria and Angola and prospecting in Mauritania and Chad.
"The Japanese said they were willing to provide soft loans with maturity of up to 40 years for any amount of money we need to develop the oil industry -- to develop the refineries, exports and production," Shahristani said.
"Right now there is a Japanese loan of $3.5 billion. More than one billion will be spent to develop the Basra refinery. Also on building a floating port and an export pipeline."
Japan recently lost out in developing neighboring Iran's giant Azadegan oilfield after Tehran grew weary with the project's slow progress. The United States had opposed the deal.
Shahristani said Japanese firms were interested in oilfields in southern Nassiriya.
CHINA TALKS SUCCESSFUL
The minister described talks with Chinese officials as successful.
He said Iraq and China had formed a committee to look again at China's contract, signed with Saddam Hussein, to develop the 90,000 barrels per day Ahdab oilfield in south central Iraq.
The committee, made up of three or four people from each side, will review the articles of the contract to "serve Iraq's interests," Shahristani said. It will meet in November.
"We have agreed to form a joint committee... to review the contract. We will begin discussions."
"The Chinese said they are ready to discuss it. They asked us to tell them which articles are not in Iraq's interest so that we review it," he added.
Ahdab, with an estimated development cost of $700 million, was awarded to China National Petroleum Corp and Chinese state arms manufacturer Norinco by Saddam. The deal was frozen by international sanctions and then Saddam's overthrow.
Shahristani said all oil contracts signed under Saddam would be reviewed by a national committee because the ministry wanted to make sure contracts were to Iraq's benefit.
"If it is not then we will amend it so that Iraq's interest will be served," he added.
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 said October production 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.