Last checked at 
BASRA, Iraq, Jan 20 (Reuters) - Iraq has proposed that ChinaNational Petroleum Corp (CNPC) continue to ramp up productionfrom the Halfaya oilfield on condition that the company acceptdeferred payments for its investment, an oil official said onWednesday.
CNPC can proceed with plans to double output at Halfaya to400,000 barrels per day, from 200,000 bpd now, if it agrees tobe reimbursed when the additional oil is actually produced,Adnan Noshi, head of state-run Maysan Oil Co, told Reuters.
The Iraqi company oversees oilfields in the namesakeprovince, south of Baghdad.
Iraq, OPEC's second-largest producer, wants foreign oilcompanies to cut spending as the nation seeks to narrow a budgetgap caused by lower crude prices, Oil Minister Adel Abdul Mahdisaid on Tuesday.
Service agreements with foreign oil companies are strainingIraq's budget as the government pays them a fixed fee forincreasing production at ageing fields when its own revenue isdropping with falling oil prices. Iraq also pays the cost ofinfrastructure investment by the companies.
Iraq generates 95 percent of its public budget from oilsales. It has service agreements with companies including CNPC,BP, Shell, Eni, Exxon Mobil andLukoil, which get paid for the extra barrels of crudeproduced at fields awarded to them through a bidding process.
Noshi denied Iraqi media reports that Halfaya may closebecause crude extraction costs there are becoming uneconomicalat current oil prices below $30 a barrel. He said the cost ofextraction at Halfaya is $15 per barrel. (Reporting by Aref Mohammed and Ahmed Rasheed; Writing by MaherChmaytelli; Editing by Dale Hudson)
