Iraqi officials say they have signed a USD 3b oil deal with China's national oil company to develop a field in southern Iraq.

The contract with China National Petroleum Corp. foresees production of 125,000 barrels of oil per day. The agreement represents Iraq's first major contract with a foreign company since the fall of Saddam Hussein, CNN reported Saturday.

Oil ministry spokesman Assim Jihad said that work could begin within a few months with the Chinese company providing technical advisers, oil workers and equipment to develop the al-Ahdab field in Wasit province over a 20-year period.

The deal is a service contract under which China National will only be paid for its services, Jihad said.

He added that Iraq has provided "security guarantees" for the Chinese oil company as it would for other foreign companies looking to work in Iraq's oil industry.

Iraq's oil ministry reportedly is negotiating short-term no-bid contracts with US and European oil companies that include Exxon Mobil Corp., Royal Dutch Shell, Total, Chevron Corp. and British Petroleum.

It's estimated that Iraq has 115 billion barrels of oil reserves, ranking it third after Saudi Arabi and Iran.

MMA/HAR