BAGHDAD (Reuters) -- Hungry for money to rebuild after years of war, Iraq will try to revive a national oil company and lure foreign investors to speed up an increase in oil output and avert a "catastrophe," officials have said.
Oil Minister Husayn al-Shahristani said he would ask cabinet to approve setting up a national oil firm and a central oil and gas council "as soon as possible" to boost output by 500,000 barrels per day (bpd) within two years, faster than previously targeted.
The two entities would need great leeway to conduct oil-field operations and set oil policy, he said.
In addition, Iraq would invite select foreign oil companies to compete for engineering, procurement, and construction (EPC) contracts, similar in format to a contract in the southern Al-Nasiriyah field for which Nippon Oil, Eni, and Repsol are vying.
"We came up with a recommendation which adopts an accelerated plan to raise from 350,000 to 500,000 the [target] increase in oil production this year and the coming year," al-Shahristani said after a conference in Baghdad.
The conference of oil officials was called to find ways to get a short-term boost in output as Iraq struggles to make enough money to shore up recent security gains after years of sectarian slaughter.
Al-Shahristani had previously said Iraq sought to increase current oil production of 2.3 million-2.4 million bpd by 300,000 bpd to 350,000 bpd within two years, with a long-term goal of 6 million barrels per day of Iraqi national oil output.
Its output now is below prewar levels, and exports are lower than the 2 million bpd pumped in May last year.
The EPC contracts would be in addition to two current bidding rounds for servicing contracts in Iraqi oil fields, which hold the world's third-largest reserves but are underexploited due to war, sanctions, and underinvestment.
Dependent on oil revenues for 90 percent of government income, Iraq faces a budget deficit this year as a result of the collapse in global oil prices from a record high of $147 a barrel last summer to around $40 now.
It desperately needs funds to rebuild after the bloodshed unleashed by the 2003 U.S.-led invasion, but has few means available for raising additional revenues, other than by boosting oil exports.
Deputy Prime Minister Barham Salih warned that inaction could be disastrous.
"If this problem isn't handled today, we might be heading for a real catastrophe that would affect the Iraqi economy," Salih said after the conference. "Time is against us."
The government has twice slashed its 2009 spending plans due to falling oil prices. A third draft of the plans, which envisages $62 billion in spending, is before parliament.
It may be cut by lawmakers as well, as it still depends on a potentially optimistic estimate of average oil prices this year of $50 per barrel.