BAGHDAD (Dow Jones Newswires), November 17, 2008

State-run Vietnamese oil company Petrovietnam is holding talks with the Iraqi Oil Ministry to revive a contract it signed with Iraq during former president Saddam Hussein's rule, a source close to the negotiations said Monday.

Petrovietnam originally signed a $300-million deal with Iraq in March 2002, to develop the Amara oil field in southern Iraq, with an estimated prewar capacity of 80,000 barrels a day.

Vietnam couldn't implement the deal because of the then U.N. trade sanctions imposed on Iraq for its 1990 invasion of Kuwait. The sanctions were lifted in May 2003, but by that time Saddam's regime had been ousted following a U.S.-led invasion.

"Negotiations between the ministry and Petrovietnam started in Amman (Jordan) earlier this year," the source said. A Vietnamese delegation was in Baghdad in September to continue the negotiations, he added.

The two sides are planning a final round of talks before signing the deal which is expected to take place at the beginning of 2009, the source told Dow Jones Newswires.

If the Amara oil field deal is signed with Vietnam, it would be the second such large contract signed with foreign investors since the 2003 U.S.-led war. The first deal was signed with China National Petroleum Corp. in September to develop the Ahdab oil field in the Shiite central province of Wasit. The contract with CNPC is worth more than $3 billion.

Baghdad also signed a preliminary agreement with Royal Dutch Shell PLC to develop the gas infrastructure in southern Iraq.

Iraq has also offered six super-giant producing oil fields and two gas fields for development by international companies.  

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