BP signs Iraq's first big oil deal since invasion

BRITAIN'S BP and China's CNPC yesterday signed Iraq's first big new oil deal since the 2003 invasion, snapping up a development deal for the Rumaila oilfield, one of the world's biggest.

The 20-year contract for the southern oilfield is the first of several deals Iraq expects to sign in the coming months as it tries to catapult itself to third place from 11th in the league of oil-producing nations. The country holds the world's third largest crude reserves.

But the deals face huge political risk. There is no guarantee the next government following an election in January will honour them, and Iraq is still wracked by political violence and bomb attacks by Sunni insurgents.

"With these contracts Iraq has started a new phase. In the past, Iraq's oil was used to finance war, to kill Iraqis and to attack neighbouring countries," oil minister Hussain al-Shahristani said.