Royal Dutch Shell and MalaysiaÔÇÖs state-owned oil company Petronas have signed a contract to develop IraqÔÇÖs Majnoon oilfield.
The 12.6 billion barrel field near the southern oil hub of Basra is one of the world's biggest largely untapped fields; but it currently produces just 46,000 barrels per day.
Shell and Petronas have pledged to increase output to 1.8 million barrels per day.
The Hague, Netherlands-based Shell, as lead operator, will hold a 45 per cent share of the venture, with partner Petronas holding 30 per cent. The Iraqi state will hold 25 per cent of the participating interests in all licences.
The firms will receive $1.39 for each barrel of oil produced.
The agreement, which was finalised on Sunday at Iraq's Oil Ministry, includes a 20-year service contract.
Shell and Petronas won the rights in an auction held in Baghdad in December.
ÔÇ£IraqÔÇÖs oil and gas reserves are among the largest in the world and we look forward to applying our experience and technology to support ongoing efforts to rebuild the countryÔÇÖs energy infrastructure,ÔÇØ said ShellÔÇÖs CEO Peter Voser, commenting on the deal.
Shell officials have said both companies would invest tens of billions of dollars over the life of the deal and that work would start as soon as the final contract was signed.
A consortium of France's Total and China National Petroleum Corp. also submitted a bid for the Majnoon field but were unsuccessful due to their proposed fee of $1.75 a barrel and suggested production plateau of 1.405 million barrels a day.
Iraq has the third largest known reserves of conventional oil after Saudi Arabia and Iran; however, it currently only produces around 2.4 million barrels per day.
The country is currently aiming to triple its daily output over the next few years with the aid of foreign financial investment and expertise.
Years of war and economic sanctions has allowed the countryÔÇÖs infrastructure to fall into disrepair, hampering oil production efforts.
Shell employs around 102,000 people worldwide and operates in more than 100 countries and territories.
