Iraq expects to produce up to 25,000 barrels a day of crude oil from Al Ahdab oil field which was recently awarded to a Chinese company, the Iraqi government said in a statement.
"The field would start production at a rate of 25,000 barrels a day as from the beginning of the fourth year from the start of work," government spokesman Ali al-Dabbagh said in a statement posted on the Iraqi cabinet Web site Thursday.
Production would increase to 115,000 barrels a day as from the beginning of the seventh year of the contract, he added. "That level will be maintained for seven years."
Earlier, Iraqi oil minister Hussein al-Shahristani said full production capacity of the field could reach up to 125,000 barrels a day.
The Iraqi cabinet Tuesday approved the $3 billion oil service contract with China National Petroleum Corp. to develop Al Ahdab oil field in the central Shiite province of Wasit. Shahristani initially signed the deal in Beijing last week.
Dabbagh said Iraq would get a net profit of $55 billion, out of estimated revenues of $63 billion that would be obtained during the 20-year duration of the contract. The estimate of oil revenues from the field is based on projected oil prices of $100 a barrel.
CNPC would drill up to 200 oil wells in the field and would construct four pipelines connected to the field. Two pipelines, one for gas and the other for crude oil, would connect the field with a power station in Wasit province, the spokesman said.
A third pipeline would be set up to carry crude oil from the field to the country's Strategic Pipeline for exports and local consumption. The fourth pipeline is to supply water from a nearby river to the water injection system of the field, Dabbagh said.
CNPC would also construct installations for crude oil extraction, gas separation units as well as a reservoir, he added.
The signing makes CNPC the first foreign oil firm to enter an agreement with the central Iraqi government to invest in the domestic oil industry since the 2003 U.S.-led invasion.
CNPC originally had an agreement with the ousted regime of Saddam Hussein to develop the Al Ahdab field, giving it a 23-year stake in profits.
However, CNPC couldn't implement the original contract at the time due to U.N. sanctions imposed on Saddam's Iraq between 1990 and 2003, which barred direct dealings with the country's oil industry.
Iraq has changed the terms, amending the contract from a production-sharing agreement to a set-free service deal.