INTERVIEW-Iraq says Big Oil to spend $25 bln next yr, despite unrest
* Foreign oil firms due to spend over $25 bln in 2014
Oil output in south expected to rise by average 500,000 bpd
* Giant southern oilfields, central fields seen safe from attack
* Smaller Nineveh oilfields, Anbar gasfield more vulnerable
* China seeks over 1 million bpd of Iraqi crude
By Peg Mackey and Ahmed Rasheed
BAGHDAD, Oct 31 (Reuters) - Big Oil is poised to spend over $25 billion next year to boost output from Iraq's giant oilfields towards record rates, Iraq's deputy prime minister for energy said, even as Baghdad struggles to control spillover from the civil war in Syria.
Far from harm's way, the prized oilfields of southern Iraq - drivers of the country's oil expansion - are expected to pump an extra 500,000 barrels per day (bpd) in 2014, said Hussain al-Shahristani. Total output this year is set to average just over 3 million bpd, holding Iraq's rank as OPEC's no. 2 producer.
But Baghdad is raising its guard at the smaller fields of Najmah and Qayara - operated by Angolan Sonangol, which lie in the al-Qaeda heartland of Nineveh province in the northwest and at the Akkas gasfield, operated by South Korea's Kogas, in the western Anbar province near the Syrian border, he said.
"We are definitely concerned about the upsurge in violence, but our concern is for the Iraqi people throughout the country. Iraq is trying its best to combat terrorism," he said in an interview in his office in the heavily fortified green zone.
"The security situation has not affected the oilfields in the south and central Iraq and we haven't noticed any hesitation or slow down in investment by the companies."
Oil titans BP, Exxon Mobil, Royal Dutch Shell and Eni have been at work in the south of the country at Rumaila, West Qurna-1 and Zubair since 2010 when they signed a series of service contracts with Baghdad.
After stagnating for decades due to sanctions and wars, their overall investment of around $30 billion - from 2010 through 2013 - has ramped up these fields by 600,000 bpd.
Shahristani said he did not expect militants to inflict any lasting damage on Iraq's strategic oil network, which has helped generate nearly $60 billion this year.
"Quite frankly, I'm not concerned about the impact of terrorist activities on our plans for oil production or power generation. We are going to go ahead," he said.
"These terrorist activities normally aim at soft spots where there are unarmed civilians - market places, mosques and schools."
Around 7,000 civilians have been killed in acts of violence so far in 2013, according to monitoring group Iraq Body Count.
Senior oil executives said they remained committed to the country that holds the world's fifth biggest oil reserves, but are taking no risks when it comes to personal safety.
"The security situation is not affecting our investment decisions," said an oil company source. "Iraq has such huge and easy to access resources: one way or another, the foreign oil companies will find a way to make money."
Iraq is now suffering bombings on a scale not seen since the bloody chaos of 2006-08 as an upsurge in sectarian violence spills over the Syrian border. And that's impacted oil and gas operations in Iraq's neighbouring provinces.
In Nineveh - where Baghdad's own oil installations and vital pipeline to Turkey come under frequent attack - Iraqi forces are stepping up patrols of Sonangol's projects.
"We have requested the ministry of defence, the ministry of the interior and the security forces to focus on the protection of these facilities," said Shahristani.
Undeterred by the bloodshed in Anbar, Kogas has signed contracts for surface installations and invested hundreds of millions of dollars in pipelines.
Here, too, security is being tightened at the project, which is experiencing minor delays.
"We have sent extra forces to the area, specifically to protect their operations," said Shahristani.
A Kogas spokesman confirmed the company was working as normal.
Whereas the rising violence has yet to prevent companies from drilling for oil or gas - it has taken a toll on the power sector in Qayara, where Baghdad is building a 750 MW gas generation plant.
"There have been a number of attacks on the site and some of the foreign contractors left temporarily," said Shahristani. "But they have come back and the work is progressing. The first units are ready for operation."
Iraq's production revival has slowed this year due to infrastructure and security problems on top of an ongoing row between Baghdad and autonomous Kurdistan, keeping output far below projected targets.
The obstacles led Iraq to backtrack on an initial 2013 target of 3.7 million bpd. The Kurdistan Regional Government (KRG) was due to contribute 250,000 bpd. "They didn't hand over any barrels," said Shahristani.
But growth is set to get back on track next year, with big output rises expected from the southern oilfields of Majnoon, led by Shell, Halfaya - where PetroChina is operator and West Qurna-2, where Lukoil is in charge.
Compared to Baghdad, where executives clad in body armour are escorted to the oil ministry in armoured SUVs, the remote, tightly guarded desert camps in southern Iraq offer a safe haven.
And the anticipated production increases from the southern fields - which could provide exports of close to 3 million bpd - will allow Baghdad to target more oil towards energy-hungry Asia, especially to core customers China and India.
Shahristani said China, which last month overtook the United States to become the world's biggest oil importer, had increased its request for Iraqi crude to more than 1 million bpd up from 850,000 bpd just two weeks ago.
"Regrettably, we will not be able to meet all our requests," he said. "This is a unique situation among oil producing countries - most of them are actively seeking more buyers for their crude."
(Additional reporting by Meeyoung Cho in Seoul; editing by Keiron Henderson)