Iraq reaches initial deal with Chinese co to develop East Baghdad oilfield

Iraq reached an initial deal with China's state-run Zhenhua Oil to develop the southern portion of the East Baghdad oil field, the oil ministry spokesman said on Sunday.

Iraq is seeking the help of Zhenhua Oil to increase production from East Baghdad oilfield to 40,000 barrels per day within five years as of the start of the development operations, Asim Jihad said in a statement, reports Reuters.

Another report adds: Iraq has given foreign energy companies a month to signal their interest in building a new export pipeline from the Kirkuk oilfields in the north of the country.

The new pipeline will replace an old and severely damaged section of the Kirkuk-Ceyhan pipeline. It will start from oilfields near Kirkuk and extend to the Fish-Khabur border area with Turkey.

Iraq's oil ministry set Jan 24 as the deadline for companies to submit letters of interest in building the new pipeline, the ministry said in a statement.

The 350-km pipeline which will have the capacity to transport more than one million barrels per day and will be run under an investment model known as "build-operate-transfer," oil ministry spokesman Asim Jihad said .

Under the project terms, the interested companies or consortia should also build a gas pipeline, pumping stations and facilities for crude storage. Jihad said interested companies must pay the project costs and can then recover them after operating the project for an agreed period of time.

Exports from oilfields in Kirkuk have been on hold since Iraqi government forces took control of them from the Kurds last month in retaliation for a Kurdish referendum on independence which was widely opposed by Turkey, Iran and Western powers.

Kurdistan has built another pipeline for Kirkuk exports to the Turkish Mediterranean port of Ceyhan after the old Kirkuk pipeline belonging to the federal government had been damaged by Islamic State militants.

An earlier report says: OPEC and Russia will exit from oil production cuts very smoothly, possibly extending the curbs in some form to avoid creating any new surplus in the market, the Russian energy minister told Reuters.

Alexander Novak also said in comments cleared for publication on Friday that he saw no direct connection between the oil cuts and Saudi Arabia's plan to list Saudi Aramco, the world's top oil producer.

"Everyone in the market is interested in achieving balance," Novak said in response to a question on whether Saudi Arabia could abruptly exit the cuts as soon as it lists Aramco sometime in 2018. The share sale promises to be the world's biggest.

The Organisation of the Petroleum Exporting Countries and other large oil producers led by Russia agreed last month to extend until the end of next year their deal to cut a combined 1.8 million barrels per day of output. The move is aimed at clearing a global stocks overhang and propping up oil prices.

Russia and Saudi Arabia have significantly improved bilateral ties this year, resulting in a visit to Moscow by Saudi King Salman accompanied by a large political and business delegation.

Oil is a key source of budget revenue for both countries and Novak said he expected prices to fluctuate at $50-$60 per barrel next year.

On Thursday, King Salman and Russian President Vladimir Putin held a telephone conversation during which they agreed to continue close cooperation to ensure stability on global hydrocarbon markets.