Chinese Oil Company Begins Operations at Iraqi Site
By EDWARD WONG

BEIJING — The largest Chinese oil company has begun major operations at the Al Ahdab oil field in Iraq, making the field the first large new one to start production in Iraq in 20 years, according to an official news report Tuesday.

Operations began June 21, and the field is expected to produce three million tons of crude oil per year, reported China Daily, an English-language newspaper. The oil field was discovered in 1979 and is believed to have reserves of one billion barrels.

The Chinese company, China National Petroleum Corp., or C.N.P.C., a state-owned enterprise, secured rights to the field under a technical service contract signed with the Iraqi government in November 2008. Under the contract, C.N.P.C. can develop the field for 23 years. The company is investing $3 billion to develop and explore the site, China Daily reported.

The deal is a renegotiation of a contract signed in 1996 with the government of Saddam Hussein to develop the field, which is 180 kilometers, or 110 miles, southeast of Baghdad, in Wasit Province. The contract was postponed after the United Nations imposed economic sanctions on Iraq and the U.S. military toppled Mr. Hussein in 2003. Analysts say the Ahdab operation is C.N.P.C.’s largest in the Middle East.

The contract says C.N.P.C. will be paid per barrel of oil rather than get equity in the oil field, as it would have under the original agreement with Mr. Hussein’s government. A Chinese oil executive said in 2009 that the company would receive a profit of less than 1 percent but that the contract was a way to “get a foot in the doorâ€