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. Last Updated: 07/27/2016

Iraq Rejects Russian Offer Waiving Debt for Oil Stake

SHARM EL-SHEIK, Egypt -- Iraq, struggling to rebuild its war-shattered economy, has declared unacceptable an offer from Russia to forgive the debt it is owed by Baghdad in return for access to a major Iraqi oil field.

Iraq's creditors are all keen to gain access to its oil wealth, but the nation could not agree to such a link, Iraqi Finance Minister Bayan Jabor said Thursday at an international conference on Iraqi stability and reconstruction in Sharm el-Sheik.

"The Russians are hesitant. They want investment in the Rumaila oil field in return for eliminating the debt," Jabor said.

Moscow has forgiven Iraq much of the debt it owes, but not the entirety.

The world's top oil companies have been maneuvering to win a stake in oil fields in Iraq, which holds the world's third biggest reserves.

They are awaiting passage of its oil law, expected within weeks, but would also require a fundamental return of law and order.

The North and South Rumaila oil fields in the south make up the bulk of Iraq's crude exports, which run at about 1.5 million barrels per day.

Iraq's oil fields are suffering from decades of wars and sanctions, but the Rumaila fields could sustain production of around 1 million bpd with the help of foreign investment, analysts said.

LUKoil also wants to revive a deal for the 600,000 bpd West Qurna oil field, which was scrapped by the government of Saddam Hussein at the end of 2002.

Jabor said Egypt had agreed to forgive all Iraqi debts to Cairo, amounting to $800 million.

He said Slovenia, Bulgaria and Poland would agree to forgive 80 percent of Iraqi debt but did not say how much that would be.

Iraq has been struggling for years to reduce its enormous debt burden, much of it money borrowed to finance the 1980-88 war with Iran.