Exclusive: Iraq close to deal with foreign firms to upgrade output, export capacity

By Ahmed Rasheed and John Davison

BAGHDAD (Reuters) - Iraq is in talks with international companies to help upgrade its oil production and export capacities and an agreement is to be reached soon, Iraqi Oil Minister Thamer Ghadhban said on Tuesday.

"This is a top priority. We have talks with international companies which lasted for a while but now we are about to reach a deal and we will settle this issue soon," Ghadhban told Reuters.

He said Iraq was targeting a production capacity of 5 million barrels per day (bpd) in 2019 and its export average was expected to reach around 3.8 million bpd.

Iraq also plans to boost export capacity, after upgrading its energy infrastructures, to 8.5 million bpd in the "coming years", Ghadhban said.

This upgraded export capacity would include 6.5 million bpd from the southern oilfields, with 1 million bpd to be available after completing construction of a new Kirkuk-Ceyhan pipeline.

Iraq's Oil Ministry received bids from three foreign contractors to build a giant water treatment facility vital for the OPEC member to grow its oil production capacity, Ghadhban said.

He said he expected work to begin in early 2019 and that the cost of the project was several billion dollars.

An additional 1 million bpd of export capacity would be added from a pipeline that eventually will connect the southern city of Basra with Jordan's Red Sea port of Aqaba, he said, and that building new pipelines aims to "diversify our export outlets".

A final deal is expected to be reached with BP to boost output from oilfields around the northern city of Kirkuk, Ghadhban said.

"I have met their representative (BP) yesterday and I hope very soon we reach an arrangement ... it's one of the priorities," he said.

(Reporting by Ahmed Rasheed; Editing by Dale Hudson)