Iraq’s Oil Ministry has signed the final contract in a deal to develop the southern portion of East Baghdad oilfield.

The deal was signed with China’s state-run Zhenhua Oil at a ceremony in Baghdad.

In a statement released on 23 May, Iraq’s Oil Minister Jabbar Ali al-Luaibi said the signing of the contract is of “economic importance to the capital”, and that it is the first oil project to be located in the Baghdad Governorate.

The ministry said the project will provide crude oil to the refineries in Iraq’s central region.

Speaking at the signing ceremony on 23 May a representative of Zhenhua oil said the company would start developing the field immediately.

Iraq is seeking the help of Zhenhua Oil to increase production from East Baghdad oilfield to 40,000 barrels a day (b/d) within five years.

The Chinese company will also build a housing development close to the field that will include 2,000 residential units as well as integrated service facilities.

Iraqi oil officials estimate that East Baghdad field, a “super giant” with around 8 billion barrels of crude reserves, has the potential to produce 120,000 (b/d).