China and Iraq have signed an agreement to jointly develop an oilfield in the Middle East country, which is among Iraq's first batch of joint-venture oil projects since the US-led invasion in 2003.

China National Petroleum Corporation (CNPC) signed the agreement on the project with the Iraq's oil ministry on Monday, said a company statement yesterday. The deal was worth US$2.9 billion, Xinhua News Agency reported.

Under the agreement China's largest oil company will help Iraqi partners develop the Al-Ahdab oilfield, 180 km southeast of Baghdad.

CNPC will "use advanced technologies to increase the oilfield's manufacturing capacity to 25,000 barrels per day within three years, and to 115,000 barrels per day within six years", said the statement.

Once the field comes into operation, it will provide fuel for nearby power stations, and will greatly relieve the nation's current power shortage, said the statement.

It will also create job opportunities and increase Iraq's oil exports, according to the statement.

Zhi Yulin, board chairman of the Alwaha Co, which is affiliated with CNPC and will take part in the project, told Xinhua that he hoped the project would boost Iraqi oil output, help facilitate postwar reconstruction, create job opportunities and contribute to social stability.

While underlining that security was the biggest challenge the company would face, Zhi promised the firm would do its best to guarantee employees' safety.

CNPC had signed an agreement on the project with the Iraqi government in 1997, but it was postponed by the UN sanctions on Iraq and the US-led invasion of the country in 2003.

Iraq, with the world's third-largest proven oil reserves, re-restarted its cooperation with foreign oil companies at the end of June.

Iraq wants to triple its production capacity to 6 million barrels a day by 2016 with the help of foreign companies.

Analysts said CNPC's entry to the Iraqi market is an important part of the company's overseas expansion. By the end of 2007, CNPC had invested in oil and gas projects in 26 countries worldwide.

At the end of October CNPC started construction of two oil refineries in Chad and Niger, which will greatly improve the oil processing industry in the two African countries.

CNPC earlier said it is eyeing some overseas companies badly hurt by the financial crisis, in a move to increase its capacity and meet rising domestic demand.

At present the company is studying the feasibility of acquiring some overseas resources companies, as the low prices of some companies offer good opportunities, Chairman Jiang Jiemin said last month.

(China Daily?November 13, 2008)