China says a multi-billion dollar oil deal with Iraq is still being negotiated.  This contradicts reports last week from Iraqi officials, who said the deal had been signed.  Daniel Schearf reports from Beijing.

China's Foreign Ministry on Thursday said negotiations with Baghdad to exploit an Iraqi oil field continue.

Iraq's embassy in Beijing last week said Iraqi officials had signed a $3 billion deal with China National Petroleum Corporation. 

Iraqi officials in Baghdad later confirmed the reports, but China's Foreign Ministry spokeswoman, Jiang Yu, indicated they were wrong.

She says she has seen some of the reports but, according to her knowledge, the Chinese oil company is right now negotiating on the oil field project with the Iraqis.

The agreement, if it is confirmed, would be the first oil deal reached when Saddam Hussein was in power to be honored by the current Iraqi government.

The deal also would place China's state-owned oil company at the front of a long line of international companies looking to tap Iraq's oil reserves, the third largest in the world.

Under the re-negotiated 20-year contract, China is reportedly to be paid for developing the al-Ahdab oil field south of Baghdad.

The original deal was signed in 1997 and granted China the right to not only explore the field but to share in the profits.

Cooperation was suspended under United Nations' sanctions against Saddam Hussein's government and the deal was canceled after the 2003 U.S.-led invasion.