London-based consultant Global Insight says China National Petroleum Corporation (CNPC) will develop the field and manage production for a 20-year period at an initial price of $6-a-barrel, which will fall to $3-a-barrel as investments are recouped.

Around 25,000-barrels-a-day (b/d) is expected to be produced in the first three years, rising to 110,000 b/d in the future.

Global Insight notes that although CNPC is not allowed to market the crude itself, the relationship will place it in a good position to guarantee a flow of oil from Iraq to China.

Iraq originally signed a $700m deal with China National Petroleum Corporation (CNPC) in 1997 to develop the field, but it was delayed and then suspended following UN sanctions (MEED 11:8:08).

An oil ministry spokesman confirmed to MEED on 2 September that Iraq’s cabinet approved the contract between North Oil Company and CNPC.

The Chinese firm has agreed to invest $3bn in exchange for a 75 per cent stake in the venture with Iraq’s North Oil Company holding the remainder. Final approval is still pending from China’s government.