Located to the south of Baghdad, al-Ahdab has oil reserves equivalent to 1 billion barrels. State-owned China National Petroleum Corp (CNPC) signed the al-Ahdab deal worth US$1.2 billion with Saddam Hussein's regime in June 1997. However, UN sanctions and the war in Iraq barred the import of Chinese equipments, leading to the delay of oil production in al-Ahdab.

Oasis Oil, a joint venture by CNPC and China North Industries Corporation (NORINCO), was the only Chinese oil dealer stationed in pre-war Iraq. The company returned to the oil-rich country in 2004, and is expected to renew exploration and development of the oilfield following agreement, according to a Beijing Morning Post report today.

All other energy contracts signed by foreign producers during the Saddam era also must be re-negotiated after Iraqi lawmakers enact a new oil and gas law, al-Shahristani said.

Iraq depends on oil for 70 percent of its GDP and 90 percent of its national income. The war-worn country needs up to US$20 billion in investment to develop its oil infrastructure, the minister said, adding that the new law expected by the end of the year will provide more guarantees for foreign investors.

During his visit, al-Shahristani met with Ma Kai, minister of the National Development and Reform Commission, Foreign Minister Li Zhaoxing, as well as executives of China's four biggest oil companies -- CNPC, China Petroleum & Chemical Corp (Sinopec), China National Offshore Oil Corp (CNOOC) and Sinochem Corp.

Al-Shahristani said his government welcomes Chinese companies venturing to Iraq, while promising favorable terms for those who assist in reinvigorating the country's oil industry.

Nonetheless, some experts feel concern over the future cooperation.

"Iraq wants to increase its export of oil products to Asia, especially China and Japan, aiming at using foreign investment to speed up its postwar economic recovery," Wang Yizhou, a research fellow at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, was quoted by China Business News as saying today. "But given its current situation, we wonder if China can receive fair treatment in competition with other bidders."

(China.org.cn by Shao Da, October 31, 2006)