The mega-project covers petroleum production, the rehabilitation of existing facilities, the capture and use of natural gas produced alongside crude oil, and potential exploration projects.

The agreement was signed between Iraq's state-owned North Oil Company and BP, Prime Minister Mohamed Shia al-Sudani's media office said.

The deal, which is the result of extensive negotiations and several memorandums of understanding, involves "the development of four major oil fields in Kirkuk: Bai Hassan, Kirkuk, Jambur, and Khabbaz".

It also includes the construction of a 400-megawatt power plant, the media office said.

BP said in a statement that the final agreement with Iraq was "for an initial phase and includes oil and gas production of more than three billion barrels of oil equivalent".

BP's statement did not put an overall value on the deal, but said the company's "remuneration will be linked to incremental production volumes, price and costs".

The company is one of the biggest foreign players in Iraq's oil sector, with a history in the country dating back to the 1920s, when it was still under British mandate.

According to the World Bank, Iraq has 145 billion barrels of proven oil reserves -- among the largest in the world -- amounting to 96 years' worth of production at the current rate.

Iraq's Oil Minister Hayan Abdel Ghani told AFP in January that the project would increase the four oil fields' production to up to 500,000 barrels per day from about 350,000 bpd.

He said that the project would also target gas flaring, the polluting practice of burning off excess natural gas released during oil drilling, which is cheaper than capturing the so-called associated gas.

The Iraqi government has made eliminating the practice one of its priorities, with plans to curb 80 percent of flared gas before the end of 2025.

Despite its tremendous oil wealth, Iraq depends on imports to meet its energy needs, and it hopes to increase natural gas production to reduce its reliance on neighbouring Iran, a crucial supplier of power.

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BP