Iraq wants foreign oil firms to cut development spending - minister

(Adds details on service agreements)

BAGHDAD, Jan 19 (Reuters) - Iraq wants foreign oil companies to cut spending as the nation seeks to narrow a budget gap caused by lower crude prices, oil minister Adel Abdul Mahdi said in a statement on Tuesday.

"The ministry is discussing reducing financial spending by foreign companies," he told a meeting of the oil fields' joint management committees in Baghdad.

Service agreements with foreign oil companies are putting Iraq's budget under strain as the government pays them a fixed fee for increasing production at ageing field when its own revenue is dropping with falling oil prices.

Iraq, OPEC's second-largest producer, generates 95 percent of its public budget from oil sales. It (Other OTC: ITGL - news) has service agreements with companies including BP, Shell (LSE: RDSB.L - news) , Eni (NYSE: E - news) , Exxon Mobil (Swiss: XOM.SW - news) and Lukoil (Other OTC: LUKOF - news) , which get paid for the extra barrels of crude produced at fields awarded to them through a bidding process. (Reporting by Ahmed Rasheed; Writing by Maher Chmaytelli; Editing by Mark Potter and Susan Thomas)