BASRA, Iraq (AFP) – The trade union representing workers of Iraq's state-owned Southern Oil Company (SOC) threatened on Thursday to prevent exploitation of one of Iraq's biggest oil fields by energy giants BP and CNPC.

Baghdad last month accepted an offer from British energy firm BP and its Chinese counterpart CNPC to work in the giant Rumaila oil field in southern Iraq that has known reserves of 17.7 billion barrels.

"If those companies try to exploit the field, our first reaction will be to stage a sit-in and to strike," union president Ali Abbas told AFP.

"We are capable of mobilising people to confront these companies and prevent their work because it is against the law."

The union, which has 28,000 registered members, opposes exploitation of Rumaila, arguing the contracts awarded to BP and CNPC contravened Iraqi law. It also fears a wave of layoffs, despite government assurances to the contrary.

"The contracts that the ministry (of oil) wants are service contracts which allow only 10 to 15 percent of employees (on the fields) to be foreigners," oil ministry spokesman Assem Jihad told AFP. "The remainder will be Iraqis."

According to Jihad, the ministry will punish employees who block exploitation of the Rumaila field, but he did not give any details.

Production from the field is currently 1.02 million barrels of oil per day. BP and CNPC will be paid two dollars for each barrel of oil that they extract in Rumaila as part of their service contracts with the Iraqi government.

In the aftermath of the June 30 auction for six giant oil fields and two major gas fields, the Iraqi government faced accusations that the sale had been a failure because the only deal struck was over the Rumaila field.

In the run-up to bidding, international companies had raised doubts over having to partner with state-owned firms and having to share management of the fields despite fully financing their development.

It was the first time Iraq's oil industry was opened up to foreign companies since its nationalisation four decades ago.