India, Iraq in Talks to Develop Oil Fields

Iraq's newly appointed oil minister, Ibrahim Bahr al-Uloum, met an Indian oil delegation to discuss the possibility of India's participation in developing Iraq's oil fields, an oil official said Thursday.

"An Indian delegation told the minister that India is ready to start development of Iraqi oil fields and exploration works despite deteriorating security," the official who asked not to be named, told Dow Jones Newswires.

He said the delegation offered to start developing a major oil field, but he declined to mention its name.

Indian oil companies are eyeing Iraq's Tuba field between Zubair and Rumaila, in the south of the country.

Last July, the former regime of Saddam Hussein said it was edging closer to signing a contract with India to develop the Tuba oil field. It isn't known, however, whether the contract was signed or not.

India's ONGC Videsh Ltd., a subsidiary of ONGC, has sought to form a venture with two other partners to produce crude from the Tuba oil field.

After the U.S.-led war that ousted Saddam from power in April, Iraq's oil marketing company, State Oil Marketing Organization, signed two contracts with India's Reliance Petroleum and Indian Oil Corp. to sell it crude oil and will.

In 2000, India agreed to help Iraq modernize its oil installations and India's Oil and Natural Gas Corp. signed a contract for an exploration block in Iraq.

India, which imports more than two-thirds of the crude oil it requires for 17 refineries that process 2.3 million barrels per day, is seeking oil acreages abroad because domestic output has peaked.

Besides buying oil from Iraq, India also has been the largest exporter of electrical equipment to Iraq. Of the $750 million that Iraq spent on its electrical needs in the last three years, India took in almost half.