"We have found before every OPEC conference there is always a sharp increase in prices," Oil Minister Amir Mohammed Rasheed told Reuters by telephone from Baghdad.

"Should we react to market fundamentals or market manipulation and speculation?"

He was speaking as North Sea benchmark Brent crude vaulted to a fresh 10-year peak of $33.00 a barrel, well above the $30 danger level which rings alarm bells in the United States.

"But are these oil prices real?" he asked. "The answer is definitely not. These levels are the result of speculation and manipulation to exert pressure on OPEC."

A steady price above $30 a barrel "should not do any harm provided it is achieved gradually through market fundamentals," Rasheed said. "Iraqi policy is for a stable price. We are definitely against price spikes."

The minister said a 500,000 barrels per day (bpd) production hike under a price mechanism applied to 10 OPEC members subject to output quotas should be sufficient to balance the market.

Eleventh-member Iraq is exempt from cartel output restraints because it is still subject to UN sanctions.

OPEC under pressure
The Organisation of the Petroleum Exporting Countries is under heavy pressure from consumer nations to lift supplies for a third time this year to cool off relentlessly rising prices.

Ministers meet in Vienna on Sunday to decide winter production limits and are expected to debate an output increase of at least 500,000 bpd.

Iraq, whose widely watched exports are a factor in volatile oil markets, is exporting a healthy 2.3 million bpd and will maintain that level until year end, Rasheed said.

But he added exports could shoot up by 400,000 bpd provided urgently needed spare parts and equipment arrived under UN auspices early next year.

"It's just a matter of plugging in the equipment over a couple of weeks," he said. "This is not a development problem."

The delays have forced Iraq to cut 400,000 bpd from an ambitious end-year export and production target, Rasheed said, adding he pegged current wellhead flows at three million bpd.

"That plan was based on the possible arrival of major equipment, especially wet crude oil processing units," he said.

"But there are still a lot of obstacles and delays in the UN Sanctions Committee - mainly by the Americans," Rasheed said. "This will prevent us from reaching our goal."

Production sharing model scrapped
Rasheed said production sharing deals struck several years ago with companies from Russia and China to develop Iraq's enormous petroleum reserves were "under complete revision".

He reiterated that Iraq's former production sharing contract (PSC) model was invalid and said all pending and future deals would be negotiated using a new development production contract (DPC) - which he said was more akin to a service contract.

France's TotalfinaElf enjoys exclusive negotiatingrights for the huge Majnoon and Bin Umar fields and has been close to signing deals for some time. Repsol and ENI are angling for Nassiryah.

"We will continue to have a lot of serious discussions with many companies for the development of our oil fields," he said, but added Baghdad will not sign deals unless ground is broken regardless of UN sanctions.

"We have had a lot of problems, delays and obstacles with these contracts which have already been signed," he said.

Firms from companies in Russia and China have failed to start work on the ground, apparently for fear of breaking UN sanctions, leaving officials in Baghdad increasingly frustrated.

A Russian-led LUKOIL consortium has signed up for the $3.7-billion West Qurna development, while China's CNPC-Norinco has inked the $700 million al-Ahdab field.

On the three-man contest for the influential post of OPEC Secretary General, Rasheed said: "This is a difficult time and OPEC will be countering a lot of challenges."

"It's important for the Secretary General to be independent and highly qualified. We will stand by our nomination."

Baghdad is backing Abdul Amir al-Anbari, the country's former United Nations ambassador and chief negotiator for the UN oil-for-food programme.

Saudi Arabia and Iran are also putting up candidates in the contest which has been at a stalemate since late last year.

The contest could flare up just as the cartel is keen to project unity before its first summit in 25 years.But Rasheed criticised the cartel's non-controversial draft version of the summit declaration, saying he wanted the words to show OPEC was truly united and independent.

"Pressure from the Americans has resulted in this draft declaration being watered down," Rasheed said.REUTERS