China and Iraq have reached a tentative agreement for a Chinese state-owned oil company to help develop the Ahdab oil field, an Iraqi Embassy spokesman said Thursday.
The deal was signed late Wednesday by Chinese officials and Iraqi Oil Minister Hussain al-Shahristani. It is meant to revive a project that was canceled after the 2003 U.S. invasion of Iraq.
"The initial agreement has been signed, and we are waiting to see the approval of both governments," said the spokesman, Sarhad Fatah. He said he could not release details or say when it might be approved.
Major oil companies have been reluctant to commit to deals in Iraq because Baghdad has yet to enact a law to govern the oil industry.
The government of former Iraqi President Saddam Hussein signed a deal in 1997 with China's oil company, government-owned China National Petroleum Corp. It was to take effect once U.N. sanctions on Iraq's oil industry were lifted.
That contract, worth $1.2 billion at the time, gave a subsidiary of the Chinese company concessions to develop the field on a production-sharing basis for 22 years.
A CNPC spokesman, Liu Weijiang, said Thursday that he could not provide any information on the new agreement.
If it is approved, the agreement would be the first Saddam-era oil deal to be honored by the new Iraqi government.
A number of companies say they signed deals with Saddam's regime and demand that those be honored, or the countries involved be given priority on new agreements.
But the Iraqi statement said that some technical services contracts with other big petroleum companies might be postponed.
Iraq's oil ministry has consistently denied giving any advantage to companies with which Saddam signed deals, instead insisting that oil and gas fields and exploration blocks will be offered up for bids.
Iraq sits on more than 115 billion barrels of oil, but decades of wars, U.N. sanctions, violence and sabotage have battered its oil industry.
The Ahdab field is located in Shiite-dominated Wasit province, about 100 miles southeast of Baghdad. It has been the scene of sporadic attacks since the U.S.-led invasion in 2003.
As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 3 million barrels a day by the end of 2008, and 4.5 million barrels a day by the end of 2013.
Shares in CNPC's publicly traded unit, PetroChina, gained 0.23 percent to 13.09 yuan early Thursday.