Iraqi cabinet approves BP licence

By Ayla Jean Yackley

ISTANBUL (Reuters) - Iraq's cabinet ratified a contract with BP and China's CNPC to develop the super-giant Rumaila field, the first major new oilfield deal signed since the 2003 U.S. invasion, a senior licensing official said on Saturday.

Separately, Iraqi oil officials are in talks again with Royal Dutch Shell on revising its offer to operate the Kirkuk oilfield, after Europe's biggest oil company failed to win the licence in Iraq's first bidding round in June.

Cabinet approval for the BP contract, which came late on Friday, sends "a strong signal" to other international oil companies seeking contracts to develop Iraq's vast hydrocarbon resources, Abdul-Mahdy al-Ameedi, deputy director of Iraq's Petroleum Contract and Licensing Directorate, told Reuters.

"We believe that we have a strong pillar now for our work towards realising our plans," he said in Istanbul, where Iraqi officials are meeting oil majors in a workshop on a second auction of oilfield contracts planned for December.

The oilfield contracts tendered this year are a central plank of Iraq's aspirations to more than triple current oil production of 2.5 million barrels per day and catapult itself to third place from 11th in the league of oil producing nations.

The Iraqi Oil Ministry says that cabinet has the final say on the contracts, but some lawmakers insist that deals must also be sent to parliament for approval. An oil law to establish a framework for foreign investment has been delayed for years.

Analysts have said there are no guarantees contracts will be considered legal by future Iraqi governments, pointing to deep rifts among politicians over control of oil wealth. The next election is due to take place on January 16, 2010.

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