After more than six months in negotiations, Iraqs Oil Ministry and Italian oil firm Eni have agreed to cut their crude oil production targets for the Zubair oil field in the south of the country.
The Zubair field target is now 850,000 barrels a day (b/d) by 2017, down from the 1.125 million b/d agreed in 2010.
The contract has also been extended by five years to 2035, according to newswire Associated Press.
Eni leads the development of the 4-billion-barrel oil field, along with the US Occidental Petroleum, South Koreas Kogas and state-owned Missan Oil Company.
Eni has delayed opening bids for a tender to build a major greenfield oil processing facility at the field as it awaited a decision on the new production target. Five firms are in the running for the estimated $1bn engineering, procurement and construction (EPC) contract.
Bids were resubmitted in May with revised technical and commercial offers.