Australian Prime Minister Kevin Rudd on Thursday agreed with his Iraqi counterpart, Nouri al-Maliki, to increase cooperation between the two nations on resources and energy projects, and to boost by as much as threefold Australian wheat exports to Iraq.

Details of the planned energy cooperation were scant. However al-Maliki - on the first-ever state visit to Australia by an Iraqi prime minister - noted Australia has "vast expertise" in energy and oil fields, a sign Iraq may want to tap that knowledge to develop its own vast energy reserves.

Analysts say a drop in oil revenue - with oil selling for just over US$40 a barrel - could create new opportunities for Western oil companies in countries such as Iraq, which have undeveloped resources and would welcome companies with deep pockets to help pay for projects.

Australian mining giant BHP Billiton Ltd. (BHP) was among several international oil firms who vied for the ill-fated one-to-two-year technical service contracts in the southern Iraq oil fields last year.

The deals - essentially consulting contracts - were aimed at increasing Iraq's pumping capacity by 500,000 barrels a day. But Baghdad in September canceled the talks due to technical and security hurdles.

BHP, which lodged a bid for the short-term deals with Royal Dutch Shell PLC (RDSB.LN), has been interested in Halfayah, part of the Missan province fields in southern Iraq - a field containing 3 billion barrels of oil - since 1995.

Al-Maliki said that two big Australian companies have already entered the frame in developing Iraqi oil fields, although he didn't name them or provide any details.

The Australian prime minister said one initial area of cooperation between the two nations will be in encouraging training exchanges for Iraqi employees of the oil and gas sector to resource fields in Australia.

In return, the Australian government will continue to support large Australian resources companies in "their desire for increased commercial opportunities in Iraq," Rudd told reporters.

Australia plans to appoint a senior trade commissioner to contribute to stronger commercial links between the countries, he added.

Iraq, which sits on the world's third largest oil reserves, plans to triple its current crude oil production, which stands at only 2.4 million barrels a day because of war, economic sanctions, lack of investment and sectarian violence.

It has announced two bidding rounds, opening 24 oil and gas fields to international companies. Iraq has set the end of June as the date for signing contracts in the first bidding round and the end of the year to sign those in the second bidding round.

The bidding parameters require that an Iraqi operator take a 51% stake in any of the joint-venture arrangements, providing a reassurance that the country's wealth will not be sold on to foreign interests.

The nation wants to move fast with the licensing rounds after countless delays getting its oil sector back on its feet since the end of the U.S.-led invasion in 2003.

Separately, Australia's Trade Minister Simon Crean said talks with his Iraqi counterpart Abdul Falah al-Sudani had revealed Iraq is interested in buying about one million tons of Australian wheat each year, almost treble the 348,000 tons of wheat exported to the country in 2008.

"The Iraqi government wants to enter into arrangements for the long-term supply of Australian wheat," Crean said.

Iraq was a major buyer of Australian wheat from the mid-to-late 1990s, with trade peaking at 2.6 million metric tons in fiscal 2000-01.

However, in early 2006 Iraq's new government suspended business dealings with Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) following revelations of US$221.7 million in kickbacks paid by AWB to Saddam Hussein's regime to secure wheat sales under a United Nations oil-for-food program.

Relatively small export deals were agreed by other Australian wheat exporters later in 2006 and in early 2008, but Rudd said Thursday's talks begin a new era in the Australia-Iraq relationship.

-By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; rachel.pannett@dowjones.com (Ray Brindal in Canberra contributed to this article)
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