A consortium grouping U.S. and European oil giants Exxon Mobil Corp. and Royal Dutch Shell PLC on Thursday signed a $50 billion deal to develop one of Iraq's most prized oil fields, as the OPEC nation looks to revamp its battered energy sector.

The deal to develop the 8.6 billion West Qurna Stage 1 field is the third such agreement in less than a week between a foreign oil consortium and Iraq, which sorely needs foreign company expertise and funding to revive an oil sector hammered by years of neglect, sanctions and, most recently sabotage.

"I am very happy today with this achievement," Iraqi Oil Minister Hussain al-Shahristani said during the signing ceremony Thursday in the Iraqi capital. "Iraq is now on its way to develop its oil industry."

Under the terms of the 20-year contract, the two companies are targeting a more than sevenfold increase in output in seven years _ from the current 280,000 barrels per day to 2.325 million barrels per day, al-Shahristani said, providing a revised production target that is up from the earlier 2.1 million barrel per day figure.

The companies will receive $1.9 for every barrel produced, and the contract could be extended for another five years. The agreement must now be submitted to Iraq's Cabinet for final approval.

Al-Shahristani said the companies' total investment in the field, which sits near the southern city of Basra, will be $50 billion, divided evenly between direct investments and operational costs.

Although Iraq sits on the world's third-largest oil reserve, with at least 115 billion barrels, the country is producing and exporting far below its potential. Daily production has ranged between 2.3 million and 2.4 million barrels per day, with exports at slightly less than 2 million barrels per day.

Foreign companies are seen as key to reviving the sector and ramping up output, with the increase crucial for Iraq as the nation relies on oil exports for 95 percent of its foreign revenues.

But the agreement also offers a new opportunity for Exxon Mobil and Shell which, like other international majors, had been kept out of Iraq following the nationalization of the sector in the 1970s.

Exxon Mobil Upstream Ventures Ltd.'s president, Richard C. Vierbuchen, said the company was looking forward to soon finalizing the deal and to an enduring partnership with Iraq.

The West Qurna announcement comes two days after Iraq finalized a deal with British oil giant BP PLC and China's CNPC to develop its biggest oil field, the 17.8 billion barrels Rumaila in the south. Continued...