Wednesday, July 1, 2009

The Iraqi government has approved an offer submitted by a consortium led by British giant BP PLC to develop the 17.8 billion barrel Rumaila oil field in the south.

Government spokesman Ali al-Dabbagh said Wednesday the Cabinet approved the deal reached a day earlier with the oil ministry, BP and China's CNPC during Iraq's first international licensing round in over 30 years.

Iraqi officials had hoped for a better showing at the auction. But sharp differences over the terms of the contract meant that only one deal was struck. A total of eight oil and gas fields had been on offer.

The government's statement did not say when the final contract would be signed.

Iraq, with 115 billion in crude reserves, relies on oil revenues for almost all its budget.