Iraq on Friday signed a contract with a consortium led by Italy's Eni to develop the giant al-Zubair oil field in the southern province of Basra, DPA reported.
The signing follows an agreement reached last year between the oil ministry and Eni to develop the 4-billion-barrel oil field.
Eni and its partners will be paid 2 dollars for each extra barrel of oil, but will be liable for a 35 per cent tax on profits, the Aswat al-Iraq news agency reported.
The Italian giant said the development of the field would require an investment of about 10 billion dollars in the first six years to raise output to 1.125 million barrels per day (bpd) from the current 195,000 bpd.
The consortium won the right to develop the field last June, following the country's first round of bidding since the 2003 US-led Invasion.
The Iraqi government, which relies heavily on oil exports for its revenue, hopes foreign investment will boost oil output to 12 million bpd up from the current 2.5 million bpd.
Iraq's proven reserves stand at 115 billion barrels, the third largest in the world after Saudi Arabia and Iran.