BAGHDAD Malaysian state oil firm Petronas and Japan Petroleum Exploration Co (Japex) (1662.T) signed an initial agreement on Monday to develop Iraq's Gharaf oilfield, in which they are expected to invest up to $8 billion.
Gharaf has estimated oil reserves of 900 million barrels, and was one of the 10 oilfields offered for development earlier this month in Iraq's second auction of oil contracts since the 2003 U.S. invasion.
"The total investment for the development of this field I think will be $7 billion to $8 billion," Ho Wang Kin, a general manager at Petronas, told Reuters.
Petronas has a 60 percent stake in the venture, and Japex the rest. The deal is a 20-year long-term service contract, and the Asian firms will be paid a remuneration fee of $1.49 a barrel and are promising to reach a plateau production target of 230,000 barrels a day.
The deal must now be sent for cabinet approval, and final deals are due to be signed after that.
Iraq is hoping a host of deals in the works will turn it into a major world energy player and increase output capacity to 12 million barrels a day in six or seven years, putting it close on the heels of global leader Saudi Arabia.
Output currently stands at around 2.5 million bpd as Iraq's oil industry struggles to overcome years of war, sanctions and neglect.
Petronas also has stakes in deals to develop three other Iraqi oilfields.
On Sunday, officials from Petronas and Royal Dutch Shell (RDSa.L) signed an initial agreement with Iraq for the development of the supergiant Majnoon oilfield, which has estimated reserves of 12.6 billion barrels.
The Malaysian firm is part of a group developing the Halfaya field with 4.1 billion barrels and the smaller Badrah field, with 100 million barrels.
"Petronas has been knocking at Iraq's door for 15 years. Finally, we have managed to open the door and take the first step into Iraq," Wang Kin said.
(Reporting by Ahmed Rasheed, writing by Mohammed Abbas; Editing by Sue Thomas)