China: overlooks 80% of Iraq's debts
China slashes Iraq debt for oil deals
China has agreed to forgive 80% of $8.47 billion in debt owed by Iraq, sealing a preliminary deal struck more than two years ago, Iraqi officials said today.
The agreement comes as China's imports of Iraqi crude rise and Chinese oil companies like China National Petroleum Corporation eye contracts to develop Iraq's vast oil reserves as the world's 11th largest oil producer emerges from years of war and sectarian bloodshed.
"We have agreed the terms of the deal, which will be signed by the finance minister at another meeting," said Hassan al-Haidari, a central bank adviser to Reuters.
China said in June 2007 it would cancel Iraq's debt owed to the Chinese government, without disclosing the amount involved.
Haidari said the deal was similar to accords reached with the Paris Club of creditor nations that has called for the cancellation of 80% of debt from the Saddam Hussein-era.
China is one of the largest outstanding creditors to Iraq alongside Saudi Arabia and Kuwait.
Iraqi finance officials agreed the terms in Beijing this month, and the final agreement will be signed in December, the finance ministry said in a statement.
The deal forgives debt owed to Chinese government companies, the advisor said. It is expected to encourage Chinese companies to participate in rebuilding Iraq, but companies would not get preferential treatment on investment bids as a result, he said.
CNPC, along with British partner BP, earlier this month signed Iraq's first major oil deal since the US invasion in 2003, snapping up a contract to develop the Rumaila oilfield.