(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 has service agreements with companies including BP, Shell, Eni, Exxon Mobil and Lukoil, 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) ((maher.chmaytelli@thomsonreuters.com; +9647901917030;)) <