Iraq 's South Oil Company, the largest government utility by crude oil production, has picked Leighton Offshore Private Ltd.--part of Leighton International (LEI.AU), to build a loading terminal at the southern port of Basra , with a value of a little more than $500 million, an Iraqi oil industry source familiar with the project said Tuesday.

Discussions between the SOC and Leighton are expected to be held early next month to work out some technical details, the source told Dow Jones Newswires.

The deal, which aims at easing bottlenecks at Iraq 's southern oil export terminals, still needs the approval of the central government in Baghdad , he added.

The Single Point Mooring buoys, which would be able to handle some 900,000 barrels a day of oil exports, would be funded by the Japanese International Cooperation Authority, which is part of the $5 billion that Japan pledged to Iraq in 2003.

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