Iraq inked a preliminary deal Tuesday with a consortium led by China's National Petroleum Corp. to develop a promising oil field, part of the war-torn country's effort to boost its lagging oil production and increase revenue for reconstruction.
CNPC and consortium partners Malaysia's Petronas and France's Total won the rights to develop the 4.1 billion barrel Halfaya field in southern Iraq, one of seven deals struck during only the second round of postwar bidding that offered 15 of the country's most lucrative oil fields for development.
The consortium plans to raise production from the current 3,100 barrels per day to 535,000 barrels per day over 13 years, Oil Ministry spokesman Assem Jihad said. Under the deal, the consortium will be paid $1.40 per barrel produced.
The 20-year deal, which has an option for an additional five years, still needs to be approved by Iraq's Cabinet, Jihad said after Tuesday's signing ceremony at the Oil Ministry in Baghdad.
Iraq sits on the world's third largest oil reserves with an estimated 115 billion barrels of proven oil. But years of neglect and war have left its oil fields in poor shape and severely underperforming. Daily production hovers around 2.5 million barrels a day, while oil exports range around 1.9 million barrels a day.
The Halfaya deal increases CNPC's presence in Iraq -- with two other deals already in place to develop oil fields in Iraq -- and reflects the energy push by China to fuel its growing economy.
Last year, CNPC struck a $3 billion deal to develop the 1 billion barrel al-Ahdab oil field in central Iraq. It was first Saddam Hussein-era oil deal honored by the new Iraqi government. CNPC and U.K.'s BP inked an earlier deal to develop the 17.8 billion barrel Rumaila field during Iraq's first round of oil bidding in June.
Tuesday's deal is part of seven awarded by Iraq during the second round of bidding earlier this month.
A consortium led by European giant Royal Dutch Shell PLC and Malaysia's state-run Petronas initialed a deal Sunday to develop Iraq's prized Majnoon field, which has 12.5 billion barrels of oil in reserves. A second deal signed Monday by a consortium grouping of Malaysia's Petronas and Japan's Japex calls for the development of the 863 million-barrel Gharraf field in southern Iraq.
Both deals still must be approved by the Cabinet.