Russian energy giant Lukoil signed an agreement in Baghdad on Sunday to develop Iraq's massive West Qurna-2 oil field, the company said in a statement, AFP reported.
"Vagit Alekperov, Lukoil president, signed a development and production agreement at the Iraqi West Qurna-2 field in Baghdad today," the company said.
Along with Norway's StatoilHydro, Lukoil signed an initial deal in December last year to develop the field, which is expected to dramatically increase the country's crude production to 12 million barrels per day (bpd) by 2017.
According to the terms of the deal, Lukoil and StatoilHydro are aiming to raise production at the field in southern Iraq, which has proven reserves of around 13 billion barrels of oil, to 1.8 million bpd.
They will receive fees of 1.15 dollars per barrel extracted.
Under the consortium, Lukoil has a 56.25 percent share, StatoilHydro 18.75 percent, and Iraq's North Oil Company 25 percent, according to Iraqi officials.
The agreement has been ratified by the Iraqi government and will last 20 years with the possibility of a five-year extension, the company said Sunday.
Production will start by the end of 2011 and the target production level of more than 90 million tonnes of oil per year is expected to be reached in 2017, the company said.
Lukoil plans to invest around 300 million dollars in the field this year and 4.5 billion dollars over the next four or five years, the company said.
Iraq has the world's third largest oil reserves, behind only Saudi Arabia and Iran, with an estimated 115 billion barrels.