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 due to UN sanctions (MEED 11:8:08).
An oil ministry spokesman confirms that Iraq’s cabinet approved the contract between Iraq's North Oil Company (NOC) and CNPC on 2 September.
The Chinese firm has agreed to invest $3bn in exchange for a 75 per cent stake in the venture, with NOC holding the remainder.
The contract was awarded on a service basis rather than the initial production-sharing deal signed under Saddam Hussein's regime.
Iraq's Oil Minister Hussain al-Shahristani estimates the field, which had an approximate pre-war production capacity of 90,000-barrels-a-day (b/d), will produce 110,000 b/d over the next two decades. The first output is expected within three years.
Final approval is still pending from China’s government.
Plans for six other consortiums to sign short-term service deals with Iraq's oil ministry for the development of key oil fields have stalled in the last few months due to changes in the terms of contract offered by Baghdad (MEED 22:8:08).
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