Iraq’s Oil Ministry has awarded a major project management consultancy (PMC) contract to the US’ CH2M Hill for a critical seawater treatment facility, which will supply oil producers in the south of the country.

The PMC deal is worth $170m, according to Dhiya Jaafar, the director general of state-owned South Oil Company, a subsidiary of the Oil Ministry, Bloomberg newswire reports.

Out of 10 firms invited to bid for the contract in May, the Oil Ministry shortlisted only two companies, CH2M Hill and Canada’s SNC Lavalin. Commercial proposals were submitted in August.

The deal covers the construction of a pipeline and giant seawater treatment facility, worth an estimated total of $10bn. The project, to be called the Common Seawater Supply Facility (CSSF), will supply water vital for the country’s oil fields, but the development has been running behind schedule.

The scheme was originally led by US oil major ExxonMobil until it fell foul of the Oil Ministry in November 2011, following the signing of production sharing agreements with the semi-autonomous Kurdistan Regional Government. ExxonMobil left the project in April.

Mott MacDonald of the UK and the US’ Fluor had originally been appointed to conduct surveys and data gathering for a 120-kilometre pipeline and the water treatment facility.

The CSSF is intended to produce 2.5 million barrels a day (b/d) of treated seawater from the Gulf by 2015, with eventual expansion up to 12 million b/d, to be injected into fields awarded in Iraq’s first and second oil licensing rounds.