Iraq has said that it is reviewing its oil production agreements with international firms because falling crude prices meant that the financial cost of existing service contracts were too high to bear.

Oil Minister Adel Abdel Mehdi said Iraq is negotiating to restore its state share in oil production contracts with international companies to 20-25 per cent, after it was reduced in recent amendments to around 5 per cent.

Last year, Iraq signed revised deals with Britain's BP, Italy's Eni and Russia's Lukoil,  cutting final production targets and also lowering the share of the state partner to 5 per cent from 25 per cent.

As Iraq aims to hike production, it is also looking at proposals to change the structure of its payments to the foreign firms, which are currently based on a fixed fee for additional volumes produced.

"There are proposals to link the profitability of the companies with the oil prices, and not just with a specific fee per additional barrel," Abdel Mehdi said in a statement obtained by Reuters.

Another proposal for discussion was to link payments to how much companies manage to lower the production costs.

Abdel Mehdi said that under current contract terms, Iraq's payments due to international companies in 2015 would reach $18 billion. - Reuters