The deal to develop the 8.6 million West Qurna Stage 1 field is the third such agreement in less than a week between a foreign oil consortium and Iraq, which sorely needs foreign company expertise and funding to revive an oil sector hammered by years of neglect, sanctions and, most recently sabotage.
Assem Jihad told The Associated Press the West Qurna deal will be initialed later in the day, and would then be forwarded to the Cabinet for approval.
Under the terms of the 20-year contract, the two companies are targeting a more than sevenfold increase in output in seven years - from the current 280,000 barrels per day to 2.1 million barrels per day. The companies will receive $1.9 for every barrel they produce, and the contract could be extended for another five years.
Although Iraq sits on the world's third-largest oil reserve, with at least 115 billion barrels, the country is producing and exporting far below its potential. Daily production has ranged between 2.3 million and 2.4 million barrels per day, with exports at slightly less than 2 million barrels per day.
Foreign companies are seen as key to reviving the sector and ramping up output, with the increase crucial for Iraq as the nation relies on oil exports for 95 percent of its foreign revenues.
The latest deal comes two days after Iraq finalized a deal with British oil giant BP PLC and China's CNPC to develop its biggest oil field, the 17.8 billion barrels Rumaila in the south.
BP and CNPC - who were the only winners in a much-touted, but ultimately disappointing oil licensing auction in June - will be paid $2 per barrel produced to raise production from the current 1 million barrels a day to 2.85 million barrels a day.
On Monday, a consortium led by Italy's Eni SpA signed an initial agreement to develop the 4.1 billion barrel Zubair oil field, which lies near West Quran and Rumaila.
Eni and its partners, the U.S.'s Occidental Petroleum Corp. and South Korea's KOGAS, aim to boost output to 1.1 million barrels per day within seven years, up from the current 200,000 barrels per day.
According to Iraqi Oil Minister Hussain al-Shahristani, the combined project output from Rumaila, West Qurna Stage I and Zubair will exceed 6 million barrels a day in six to seven years, with the companies expected to invest a total of about $100 billion in the projects.
Two other consortiums were bidding for the West Qurna Stage 1 project - one headed by Russia's Lukoil and U.S. giant ConocoPhillips and the other was headed by China's CNPC.
The field was among five oil and two gas fields left over from the June bidding round, Iraq's first such oil auction in more than 30 years.
Iraq is planning a second bidding round on Dec. 11-12. Forty-five international oil companies will compete for development right for 10 oil projects.