Iraqi Oil Minister Thamir Ghadhban told Vice Premier Zeng Peiyan on Thursday in Beijing that the Iraqi people value their traditional friendship with China and welcome Chinese enterprises to take part in the country's oil industry reconstruction and economic development.

He said that the Iraqi government will take steps to protect the legitimate interests of all foreign enterprises and strive to create a safe and peaceful environment for the development of both individuals and businesses.

Zeng replied that the Chinese government looks forward to enhancing its friendly relationship with Iraq in accordance with the principles of mutual respect, equality and mutual benefit.

"Iraq is an important energy power in the Middle East. Restoration of its oil production will help stabilize the world's turbulent oil market," he said.

He noted that China's oil industry has accumulated extensive experience in exploration and in the utilization of refining equipment. China also enjoys advantages in funding, technology, skilled technicians and equipment.

To help the Iraqi people quickly improve their economic situation, the Chinese government will encourage domestic businesses to participate in the reconstruction of Iraq's oil industry, Zeng said.

According to the Global Policy Forum (GPF), Iraq has the world's second largest proven oil reserves. Oil industry experts believe that new exploration could raise Iraq's reserves to as much as 300 or 400 billion barrels of high-grade crude, with a high recovery rate and low processing costs.

This could, over time, mean profits counted in the hundreds of billions of US dollars for international oil firms.

Iraq currently produces less than 3 million barrels of oil a day.

Oil Minister Ghadhban is quoted in an October article on the GPF website as saying, "We believe that there is at least 2.5 to 3 million barrels per day of new oil production capacity that could, in the long term, be added to our production levels." He added that Iraq is currently formulating its policies and is likely to open its doors to international oil companies next year.

Many of the Western oil giants have so far hesitated to invest in Iraq because of security concerns, but some have indicated that they believe the situation will improve after the elections, currently scheduled for January 30.

(Xinhua News Agency, China.org.cn?December 3, 2004)