Iraq is close to signing a $53bn, 30-year energy agreement with Exxon Mobil and PetroChina, Prime Minister Adel Abdul Mahdi said on Tuesday, denying any link between the mega-project and US permission for Iraq to do business with Iran.
Iraq expects to make $400bn over the 30 years the deal will be in effect, the prime minister said.
The southern mega-project involves the development of the Nahr Bin Umar and Artawi oilfields and raising production from the two fields to 500,000 barrels per day (bpd) from around 125,000 bpd now, Abdul Mahdi said.
The project is crucial to supplying water to oilfields in the south in order to boost pressure and keep production steady.
Media reports had quoted Iran's ambassador in London on Monday saying the US would grant waivers to Iraq allowing it to deal with Iran economically, in exchange for Baghdad signing an oil deal with Washington.
"Talks now between the oil ministry and Exxon Mobil and PetroChina are focused on how to split profits if oil prices rise or decline," Abdul Mahdi said in response to a Reuters question on the obstacles holding up a final agreement.
"The deal lasts for 30 years and such financial details are sensitive and should be given more discussions," he added.
Iraq is the second largest oil exporter in Opec and has long-term aims to boost output curtailed by decades of war and sanctions.
Such projects are among the most valuable prizes in the world for international oil companies.
An initial agreement would be a big boost for Exxon Mobil's plans to expand in Iraq.
It is also one of the only countries in the world to have friendly relations with both the US and Iran.
Exxon Mobil and PetroChina will build a water injection project to feed oil wells in the south, as well as rehabilitate and build new export pipelines, Abdul Mahdi said.
The project also aims to process 100mn standard cubic feet of natural gas per day from the Artawi and Nahr Bin Umar fields.
US President Donald Trump pulled out last year from a 2015 nuclear deal between Iran and world powers, and reinstated sanctions against Tehran.
Washington has told buyers of Iranian oil to stop purchases by May 1 or face sanctions.
Iraq does not import oil and has a waiver from the US allowing it to import Iranian natural gas.
"The US sanctions are against countries that buy Iranian oil only, and Iraq doesn't buy any Iranian crude. For gas, as far as I know (waivers ending) won't affect (gas imports) right now.
The waiver for gas still stands," an Iraqi oil official told Reuters on Monday.
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