Russia 's oil producer OAO Lukoil Holdings (LKOH.RS) and its partner Japan 's Inpex Corp. (1605.TO) Tuesday initiated a deal with the Iraqi Oil Ministry to explore for oil at an Iraqi block in southern Iraq , a senior Iraqi oil official said.

The initial contract was signed in Baghdad by head of the Petroleum Contracts and Licensing Directorate at the Iraqi Oil Ministry Abdul Mahdy al-Ameedi and senior executives for Lukoil and Inpex.

After signing the contract, the ministry will send it to the government for final approval before giving it final signature, Iraqi oil officials said.

Lukoil and Inpex were awarded block 10 located 120 kilometers west of the southern Basra governorate during a licensing auction held in Baghdad in May.

Lukoil's overseas arm has a 60% share of the field, while Inpex has the remaining 40% stake.

The winning bids were a remuneration fee of $5.99 a barrel of oil equivalent, a signature bonus of $25 million, a mandatory minimum exploration program which includes a 1,375-kilometer 2D-seismic acquisition and the drilling of one exploration well, and also a minimum expenditure of $100 million.

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