India is negotiating a term contract with the new administration in Baghdad to import Iraqi crude even as it hopes to keep the exploration acreage awarded to it by the Saddam Hussein regime.

While the Indian Oil Corporation has began negotiating with Iraq's State Oil Marketing Organisation for a term contract to import Basra Light crude, ONGC Videsh Ltd's managing director Atul Chandra was in Baghdad earlier this month to secure a contract for the oil exploration exploration acreage - Western Desert Block 8, petroleum secretary B K Chaturvedi told reporters in New Delhi on Thursday.

"We are hopeful of striking a deal," he said.

New Delhi is seeking at least 3 million tonnes of Iraqi crude annually on the government-to-government term contract.

SOMO had earlier this week stated that it is in negotiations for term crude contracts with refiners for the period August 1 to December 31, and has set prices for the Basra Light crude lifting in August.

SOMO said the price for lifting Basra crude from the Persian Gulf export terminal Mina al Bakr to the South East Asian countries would be at parity to the Oman/Dubai quotes.

Iraqi Basra Light crude is a favourite among the Indian refineries as it offers a cheaper alternative to their mainstay imports of Saudi Arabia's Arab Light and medium sour grade Oman. Basra Light is normally priced below both.

Chaturvedi said the OVL managing director has held negotiations with the interim United States administration in Iraq on the exploration acreage, Western Desert Block 8, for which an agreement signed with Baghdad in 2000, but the company had not begun any groundwork because of the UN sanctions.

"What has emerged from the negotiations is that our contract for Block 8 is secure. The award of Block 8 by the Saddam Hussein regime was also ratified by the Iraqi Parliament and so we are hopeful that things will work in our favour."

Besides Block 8, OVL was also in negotiations for the Tuba oil field. OVL was working on Iraq's Tuba oil field before evacuating during the 1990-91 Gulf War, and it never returned. Over the past year, it had been actively negotiating its comeback to the field with an eye on the UN sanctions against Iraq being lifted.

The Tuba field in southeast Iraq is said to have a capacity to produce up to 200,000 bpd of crude. It can be brought on stream within two to three years of starting work. The latest negotiations over Tuba saw OVL, Reliance Industries Ltd and Algeria's Sonatrach bidding for a contract as a consortium.