Official: Iraq, China nearing oil deal

Iraq and China are close to re-signing a $1.2 billion oil deal that was called off after the 2003 U.S. invasion, an Iraqi Oil Ministry official said Thursday.

Iraq sits on more than 115 billion barrels of oil, the world's third-largest reserves, but violence and sabotage have crippled efforts to use the resource to fund the country's reconstruction.

As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 3 million barrels a day by the end of 2008, and 4.5 million barrels a day by the end of 2013.

Saddam Hussein's government signed a deal with the state-owned China National Petroleum Corp. to develop the billion-barrel al-Ahdab oil field, despite U.N. sanctions that barred direct dealings with Iraq's oil industry. Beijing was waiting for the sanctions to end when the U.S. invasion overthrew Saddam. The two countries restarted talks in October 2006.

"We are expecting that the next round of discussions, due to be held in April, will finish the negotiations," the official told The Associated Press on condition of anonymity because he was not authorized to release information. AP