China National Petroleum Corp (CNPC), China's largest oil and gas producer, and Britain's oil giant BP signed an initial agreement on Thursday with Iraq's Oil Ministry to develop Rumaila, Iraq's largest oilfield.

"The signed contract will be referred to the cabinet for approval," said Iraq's Oil Ministry spokesman Asim Jihad. "The ministry will set an official date for signing the contract after the cabinet's approval."

He said the deal, which requires an investment of more than $15 billion, was signed by the ministry, represented by the State-run South Oil Company, and CNPC and BP.

A BP spokesman confirmed that they had signed the initial contract and were waiting approval from the Iraqi government.

He said it was an important milestone and BP hoped to be able to sign the final agreement before the end of this year.

CNPC said it was not ready to comment.

BP and CNPC won the Rumaila deal after they cut their proposed remuneration fee to $2 per barrel. Iraq offered eight contracts in a June auction.

As Iraq's largest producing oilfield, Rumaila accounted for almost half of the country's total output of 2.4 million barrels per day (BPD), with a current capacity of 1.1 million BPD. The field's reserves are estimated to be 17 billion barrels.

BP and CNPC aim to boost its output to 2.85 million barrels per day over the 20-year contract.

Under the service contract, BP holds a 38-percent stake in the Rumaila venture, while CNPC has a 37-percent share. Iraq's State Oil Marketing Organization holds the rest.

The contract for Rumaila aims to inject foreign cash to overhaul dilapidated facilities and outdated practices.

Analysts said the overseas expansion was in line with China's increasing oil imports. More than 60 percent of China's oil consumption will be met by imports in 2020, according to a recent report by the Chinese Academy of Social Sciences.

"The cooperative module is good for domestic oil companies because they need international giant partners to reduce the risks," said Lin Boqiang, director of China Energy Economic Research Center at Xiamen University. "Domestic oil companies are speeding up the pace of overseas expansion, but they have a relative lack of experience in international operations."

There will be more business opportunities in the latter stages of the oilfield exploitation, said Lin. The most significant part of the deal was to be involved in and gain international experience, he added.