Iraq, China Discuss $1.2B Oil Deal

20 August 2008

Iraq's oil minister will be in China later this month to complete a $1.2-billion oil deal. A news report on Reuters says this is the first big international deal since the fall of Saddam Hussein.

The agreement that Oil Minister Hussein al-Shahristani is working on with Chinese officials covers development in the Ahdab oil field, South of Baghdad.

Surging oil demand from China and India's fast-growing economies are a key reason oil prices have risen over the past several years.

Iraq has the world's third largest oil reserves, but currently exports only about two million barrels of oil per day. Many oil companies would like to develop Iraq's oil fields to boost production.

A news story in the New York Times says oil producing nations like Iraq are driving harder bargains with foreign companies, offering them a set price for development work rather than a share of the oil.

Data from the Bloomberg financial news service show Iraq supplies around five percent of China's oil.