Iraq has the world's third largest oil reserves

Oil giant Shell and Malaysia's state-run Petronas oil company finalised a contract on Sunday to develop Iraq's giant Majnoon oil field.

In December Shell and Petronas beat a rival bid from France's Total and China's CNPC to develop the 12.6bn barrel field in southern Iraq.

The field currently produces just 46,000 barrels per day.

Shell and Petronas have pledged to increase that output to 1.8 million barrels per day.

Foreign expertise

The deal was signed at Iraq's Oil Ministry in the presence of Iraqi Oil Minister Hussain al-Shahristani and Mounir Bouaziz, an executive of Shell Gas and Power.

Royal Dutch Shell owns 60% of the venture, with Petronas owning the remainder.

Their joint-venture, which includes a 20-year service contract, will see the firms receive a fee of $1.39 a barrel of oil.

Iraq's known reserves of conventional oil rank behind only Saudi Arabia and Iran.

Its daily output is relatively small - about 2.4 million barrels - but it aims to triple that over the next few years.

It needs the expertise of foreign companies to reach that goal of reviving its oil industry, which has been battered by years of war and sanctions.