Iraq Oil Report

Iraq will sign a $1.2 billion oil service contract with China to replace a production-sharing deal agreed under Saddam Hussein, the Iraqi newspaper, an-Noor said, quoting oil minister Hussain al-Shahristani.

The oil minister is travelling to China at the end of this month to discuss the deal, which was orginally signed in 1997 between Iraq and the China National Petrolium Company, Ahmed Rasheed writes for Reuters.

“We have held talks with (the Chinese) for a year, and the terms of the deal were changed to a service contract. The Chinese have agreed on that, with a value of $1.2 billion,” Shahristani said.

The minister added Iraq is in the final stages of negotiations with a large global oil company on a joint venture to produce and export natural gas.

“Now we are in the final stages of talks with one of the biggest global companies to establish a joint venture, in which Iraq will hold the largest stake, to collect and produce the gas, to supply electric power and liquify the surplus and export it,” Shahristani told an-Noor.

Later in the interview, he repudiated a Saddam Hussein-era contract with Russia’s largest private oil company LUKOIL, saying the contract was “totally unfair.”

“Relating to the Russian contract, it was signed with the former regime for political reasons and scrapped by the former regime also for political reasons,” the minister said.

“It is a totally unfair contract,” he said.

Prime Minister Fuad Siniora will travel to Baghdad Wednesday for trade talks, becoming the first Lebanese leader to visit Iraq since the fall of Saddam Hussein, Agence France-Presse reported.

It follows a trip to Iraq on August 11 by Jordan’s King Abdullah II, the first by an Arab head of state since the 2003 US-led invasion which toppled Saddam.

“The discussions with Iraqi leaders will be on bilateral relations and particularly trade and oil,” the premier’s spokesman said on Monday, without confirming a specific date for the trip.

The move follows a similar energy agreement between Egypt and Lebanon for natural gas.

Norway’s DNO does not expect to produce any oil from its Tawke field in northern Iraq in August, after the Kurdistan Regional Government halted local output as part of a review of licensing and procedures, Perry Williams writes for Middle East Business Intelligence.

DNO, one of several independent oil companies working in Kurdistan, says its production of 11,191 barrels a day in July would be cut completely in August by KRG for its studies.

The firm says the KRG is reviewing the “licensing, compliances and uniformity of procedures” applied to small topping plant owners in the area, in order to better regulate the supply of crude oil and the quality of products.

The U.S. got more crude oil from Iraq than Alaska in June as imports from OPEC continued to top domestic production. A review of U.S. data shows that in 17 of 18 months dating to January 2007, crude-oil imports from the Organization of Petroleum Exporting Countries exceeded U.S. production levels.

The figures shine a spotlight on the main points of the long-overdue debate over energy policy in the world’s biggest oil consumer, Dow Jones reported.

Iraq needs around $400 billion over the next few years to rebuild its shattered infrastructure, Dow Jones reported, quoting Iraqi Finance Minister Bayan Jabor.

“We have conducted a scientific study which states that some $400 billion is needed to rebuild infrastructure,” Jabor told the state-run al-Iraqia satellite channel.

“Our problem is how to administer money to finance reconstruction projects,” he said.

Jabor said most of the oil-generated budget is being used to pay salaries for 4 million retired and still-in-service civil servants. Some $6 billion will be spent on food stuffs purchases to cover the food ration system the government is implementing.

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