BAGHDAD, Aug 25 (Reuters) - Iraq has paid foreign oil companies $9 billion in remaining arrears for 2014 and was paying outstanding fees for 2015 in stages until the beginning of next year, its oil minister said.
Adel Abdel Mehdi wrote in the al-Adala newspaper that the ministry would study with foreign oil companies ways to reduce costs and link them to oil prices.
International firms, such as BP, Royal Dutch Shell, ExxonMobil, Eni and Lukoil operate in Iraq's southern oilfields under service contracts, whereby they are paid a fixed dollar fee for production.
This means that with the drop in oil prices over the past year, the amount of crude needed to pay the companies has roughly doubled.
The arrangement has put Baghdad's coffers under immense strain, as a dramatic drop in crude prices since last summer has hammered the revenue it receives from selling oil.
Oil companies have already proposed millions of dollars of budget cuts.
Abdel Mehdi said the OPEC member's southern crude oil exports would exceed 2.750 million barrels per day (bpd) through the end of 2015, which is the estimated volumes for this year's budget.
Iraq's southern oil exports rose in July to a record average of 3.064 bpd from 3.02 million bpd in June, following Baghdad's decision to split crude stream into two grades, Basra Heavy and Basra Light, to reduce quality issues. Some companies increased production following the move.
The minister said the split has helped to boost Iraqi crude exports by around 200,000 bpd to 300,000 bpd.
Lower oil revenues are straining Iraq's budget, as it fights an Islamic State insurgency that controls large swathes of territory in its north and west.
(Reporting By Stephen Kalin; Editing by Rania El Gamal and William Hardy)
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