Iraq signs deal with BP, CNPC for Rumaila field

By Ahmed Rasheed

BAGHDAD (Reuters) - Iraq's Oil Ministry said on Thursday it had signed a deal with Britain's BP and China's CNPC to develop its super-giant Rumaila oilfield, a milestone in Iraq's efforts to renew its struggling oil sector.

"The signed contract will be referred to the cabinet for approval, after which the Oil Ministry will hold a ceremony to announce the beginning of work by the two companies," Oil Ministry spokesman Asim Jihad said.

Jihad said the agreement was signed by the ministry, represented by the state-run South Oil Company, and CNPC and BP.

The service contract for Rumaila was the only deal which emerged from the ministry's first oilfield auction in June, a centrepiece of its strategy to bring new life to a sector rich in reserves but in desperate need of foreign cash to overhaul dilapidated facilities and outdated practices.

But more first round deals may be in the works.

An Oil Ministry official, speaking on condition of anonymity, said the government had formed a commitee to study new or revised bids for fields that were not awarded in June.

He said that Exxon Mobil had put forward a new bid for Zubair oilfield, while Chevron and Total had submitted a new offer for West Qurna field.

The committee, headed by Thamir Ghadhban, a senior energy advisor to Prime Minister Nuri al-Maliki, is studying the proposals and a decision should be made shortly, he said.