BAGHDAD (AFP) – A consortium led by Russian energy giant Lukoil initialled a deal with Iraq at a ceremony at the oil ministry in Baghdad on Tuesday to develop the massive West Qurna-2 oil field.

Along with Norway's StatoilHydro, Lukoil is aiming to raise production at the field in southern Iraq, which has proven reserves of 12.876 billion barrels of oil, to 1.8 million barrels per day (bpd).

They will receive fees of 1.15 dollars per barrel extracted.

Initially, the pair had said Lukoil would have an 85 percent stake in the project, with the remainder coming from Statoil.

On Tuesday, however, Statoil said it had reached agreement with Lukoil to raise its stake to 25 percent.

Iraq auctioned West Qurna-2 to the companies on December 12, the second day of a two-day oil field auction which dramatically increased the country's projected crude production to 12 million bpd within seven years.

Iraq has the world's third largest oil reserves, behind only Saudi Arabia and Iran, with an estimated 115 billion barrels.