UPDATE 1-China says willing to help Iraq any way it can

Fri Jun 13, 2014 2:04pm EDT

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BEIJING, June 13 (Reuters) - China said on Friday that it was watching security developments in Iraq closely after Islamist fighters captured two more towns in a southward sweep, and offered the Baghdad government whatever help it can give.

China is the top foreign player in Iraq's oilfields, which are the largest in the Middle East open to foreign investment, and has a natural interest in the country's stability.

"China is paying close attention to the recent security situation in Iraq and we support the Iraqi government's efforts to maintain domestic security and stability. We hope that Iraq can return to stability, safety and normality as early as possible," said Hua Chunying, a Foreign Ministry spokeswoman.

"For a long time, China has been giving Iraq a large amount of all sorts of aid and is willing to give whatever help it is able to," she told a daily news briefing without elaborating.

China had asked Iraq's government to ensure the safety of Chinese people in the country, Hua said, though she did not say if any there had been any effect on Beijing's oil interests there.

State-run China National Petroleum Corporation (CNPC), China's biggest oil and gas producer, has three projects in Iraq, in the country's south and southeast.

Most of Iraq's oil drilling and export facilities are in the south, where al Qaeda-inspired groups have little support. They are not expected to be as vulnerable to insurgents as infrastructure in northern Iraq.

Analysts, however, said there was little China can do to immediately bolster the Iraqi government and protect their interests, despite aid it has offered to Baghdad in the past.

"The situation shows how mixed up the geopolitics of the Mideast and oil have become," said Daniel Yergin, the vice chairman of research group IHS and a noted oil historian.

"This time, the U.S. and China and Iran are all on the same side, trying to preserve the Iraqi state - each of them with their own interests, and all of them unprepared and caught by surprise," he said. (Reporting by Ben Blanchard in Beijing and Timothy Gardner and David Brunnstrom in Washington; Editing by Nick Macfie and G Crosse)

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