BAGHDAD — Iraq and China are close to re-signing a $1.2 billion oil deal that was called off after the 2003 U.S. invasion, an Iraqi Oil Ministry official said Thursday.

Iraq sits on more than 115 billion barrels of oil, the world's third-largest reserves, but violence and sabotage have crippled efforts to use the resource to fund the country's reconstruction.

As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 3 million barrels a day by the end of 2008, and 4.5 million barrels a day by the end of 2013.

Saddam Hussein's government signed a deal with the state-owned China National Petroleum Corp. to develop the billion-barrel al-Ahdab oil field, despite U.N. sanctions that barred direct dealings with Iraq's oil industry.

Beijing was waiting for the sanctions to end when the U.S. invasion overthrew Saddam. The two countries restarted talks in October 2006.

"We are expecting that the next round of discussions, due to be held in April, will finish the negotiations," the official told The Associated Press on condition of anonymity because he was not authorized to release information.

The field could produce an estimated 115,000 barrels a day, the Iraqi official said.

The Chinese Foreign Ministry said it had no information about the talks. Officials with CNPC and China's Commerce Ministry could not be reached for comment.

The two sides met last week in Amman, Jordan, and the governor of Wasit province, where the al-Ahbad field lies, assured the Chinese that their workers and facilities would be protected by Iraqi security forces, the official said.

Wasit, about 100 miles southeast of Baghdad, has been the scene of sporadic attacks since the U.S.-led invasion in 2003.

On Wednesday, another oil official said that Iraq's Cabinet has given the nod to the Oil Ministry to sign agreements with international oil companies to help increase the nation's crude output.

The two-year deals, known as technical support agreements, or TSAs, are designed to develop five producing fields that would add 500,000 barrels per day to the country's 2.4 million barrels per day output.