"Foreign oil companies are negotiating with Iraq to develop a number of oilfields and oil industry projects despite the low level of oil prices," the Iraqi News Agency quoted Oil Ministry Under Secretary Faez Abdullah Shaheen as saying.

"He stressed that the drop in oil prices was a temporary condition which would not last long," the agency said.

Shaheen said talks had progressed with several companies to drill and explore in the Western desert and were under way with French firms to develop oilfields. He gave no details.

"Iraq intends to implement a programme to raise its production and export capacity of crude oil to output of about six million barrels per day in the future with the cooperation of foreign companies," the agency reported.

U.N. trade sanctions ban Iraq from exporting oil aspunishment for invading Kuwait in 1990. But the UN has since 1996 allowed Iraq some oil sales to pay for humanitarian needs.

Once international sanctions are lifted, Iraq will want oil companies from major world powers to develop sensitive border oilfields in case of sovereignty disputes, a report this week by Britain's Robertson Research International said.

Iraq has sought to cement ties with China, Russia and France by tying them into big oilfield deals after the UN sanctions are lifted. The agency said Chinese and Russian firms already had contracts in Iraqi oil projects.