By Eugene Tang and Wing-Gar Cheng
Oct. 28 (Bloomberg) -- Iraq will invite China National Petroleum Corp. and other overseas companies to invest in oil fields to double daily production to 6 million barrels by 2012, the country's oil minister Hussain al-Shahristani said.
``We need foreign partners to help develop new fields,'' al- Shahristani said at a press conference today in Beijing. ``Iraq will significantly increase its oil production in the next few years and China will significantly raise its imports. That's why the two countries will need to work closely together.''
Iraq will increase its oil production to 3.5 million barrels a day by next year, with the capacity to export 2.4 million barrels a day, al-Shahristani said. The increased oil output will not be curtailed by the Organization of Petroleum Exporting Countries, or OPEC, because Iraq has been producing less than its quota for many years, he said.
``Our friends at OPEC understand Iraq needs to produce more oil quickly,'' he said. ``The general position is to allow Iraq to produce as much oil as quickly as possible.''
China imports about 40 percent of its oil. The world's fastest-growing major economy may consume 7 million barrels of oil a day this year, 6.4 percent more than in 2005, according to an October forecast by the International Energy Agency.
Need for Oil
The Asian nation needs more fuel to run power plants and feed its industries, prompting Chinese oil companies to look abroad for fields. Demand for oil in the world's fourth-largest economy has almost doubled in a decade, contributing to record prices.
The Iraqi parliament is poised to pass a law to regulate the country's oil and gas industry. All contracts signed during and after the collapse of Saddam Hussein's regime will have to be renegotiated under the terms of the new legislation, al- Shahristani said today.
At stake are an estimated $700 million of agreements signed in 2000 that gave China National Petroleum the right to develop the Al-Ahdab and Al-Qorna oil fields in southern Iraq.
``A committee has been convened to discuss this and they will commence work next month'' to renegotiate the terms of the contract to meet the requirements of the new law, al-Shahristani said today. ``The law allows participation but not control. The oil of Iraq belongs to the Iraqi people.''
Renegotiate Contracts
Agreements that China National Petroleum and China Petrochemical Corp., the nation's biggest oil companies, had to develop Iraqi oil fields were halted by the U.S. invasion in 2003 and the conflict that followed.
Iraq's government is increasing efforts to stop attacks on oil installations and ease companies' concerns over security, Thamir Ghadhban, an adviser to the Prime Minister, said Sept. 13.
Chinese companies plan to drill for oil in Iraq, which holds the world's third-largest proven oil reserves, China Oil News, China National Petroleum's online newsletter, reported Oct. 18, citing Dathar Al Khashab, general manager of Iraq's Midland Refineries Co.
China was approached after U.S. companies refused to work in Iraq, Al Khashab was cited as saying. Chinese companies have dismissed security threats, he said, without giving details.
China's government supports a return by the nation's oil companies to Iraq. Al-Shahristani said he met Chinese oil executives including the directors of China National Petroleum, China National Offshore Oil Corp. and China Petroleum and Chemical Corp. to discuss investments in Iraq.
Chinese Technology
``Chinese oil companies have the capital, capacity, technology and interest to invest in Iraq,'' he said today. ``They are willing to modify their facilities to work on Basra crude if Iraq can guarantee consistent supplies. We can very easily double our output and guarantee the supply.''
``We welcome cooperation between Chinese oil companies and other countries in the energy field,'' Zhang Yuqing, deputy director of the energy bureau at the National Development and Reform Commission, said on Oct. 18. ``If the Iraqi side seeks investment from Chinese enterprises, especially in oil field exploration and production, the Chinese government won't interfere in any of the activities of the oil companies.''
To contact the reporter on this story: Eugene Tang in Beijing at
Last Updated: October 28, 2006 04:51 EDT