A Chinese state-run company, ZhenHua Oil, will develop an oil field near Baghdad under an accord with Iraq, the oil ministry said Sunday.

A ministry spokesman told AFP the target was to produce 40,000 barrels per day from the southern sector of the East Baghdad field within five years of implementation of the accord between ZhenHua and Iraq's Midland Oil Company.

Iraqi oil officials have estimated the East Baghdad field, a “super giant” with around eight billion barrels of crude reserves, has the potential to produce 120,000 barrels of oil per day.

Iraq reaches initial deal with China's Zhenhua to develop East Baghdad oil field https://t.co/itvX5vcLM4#Sharjah24 pic.twitter.com/RSrKvmdffP — الشارقة24 (@sharjah24) December 24, 2017

Iraqis will initially account for 50 percent of the workforce, a figure that will rise to 80 percent.

Under the initial deal, which will be announced in formal ceremonies to be held in Baghdad on Monday, the Chinese firm will commit to building an “oil residential complex”, the statement said.

Oil ministry officials said increasing East Baghdad crude production would help feed nearby refineries and power stations and free up more oil for exports from the southern region.

Iraq produces and exports the bulk of its crude from the southern region.

Set up in 2003, ZhenHua, a unit of state military group China North Industries Group Corporation, operates 11 oil and gas exploration and production projects in Egypt, Myanmar, Kazakhstan and Iraq, according to its website.