Iraq's Cabinet will meet next week to ratify a deal with a consortium led by Italy's Eni SpA to develop a prized southern oil field, the prime minister said Tuesday.
Eni, the U.S.'s Occidental Petroleum Corp. and South Korea's KOGAS last week initialed a deal to develop the 4.1 billion barrel Zubair field, with an eye toward boosting output from around 200,000 barrels per day to 1.1 million barrels per day within seven years.
The deal must still be approved by the Cabinet.
Another deal initialed last week, with a consortium led by U.S. and European oil giants Exxon Mobil Corp. and Royal Dutch Shell PLC for the West Qurna Stage 1 field, is also awaiting Cabinet approval.
During a news conference Tuesday, Prime Minister Nouri al-Maliki said the Cabinet's legal committee had some issues regarding the Zubair contract and that it has been referred once again to the legal department and the oil ministry to deal with the issues.
He said the Zubair deal would be submitted to the Cabinet next Tuesday for ratification. The prime minister did not specify what the issues were.
"There have some comments forwarded to us by the legal department, so the contract has been referred once again to discussions between the legal department and the oil ministry," al-Maliki said of the Zubair deal. "Then it will come back to the Cabinet on Tuesday for ratification."
According to the Zubair deal initialed last week, the Eni-led consortium would receive $2 per barrel of crude produced.
Under the terms of the separate West Qurna Stage 1 deal, the two companies would receive $1.9 for every barrel produced in the 8.6 billion barrel field, if the deal is approved by the Cabinet. The deal calls for them to boost production from 280,000 barrels per day to 2.325 million barrels per day within the first seven years.
Both deals would last for 20 years and could be extended five more years.
Iraq has the world's third-largest known oil reserves, and crude exports are the country's most important source of revenue. But Iraq's current daily output of 2.4 million barrels is far below its potential.
Iraq's oil industry has been hampered by years of devastating wars, crippling sanctions and sabotage attacks by insurgents after the 2003 U.S.-led invasion.
(This version CORRECTS previous version, which was killed, to show that Exxon deal was not approved by Cabinet; Zubair deal to be discussed next week.)