Under the $2.9-billion deal, China National Petroleum Corporation (CNPC) will help develop the al-Ahdab oil field in eastern Iraq's Wasit province.
"This is an important participation from the Chinese side to develop the Iraqi oil fields, and we are looking forward for more participation in rebuilding Iraq," the agency quoted Iraqi Oil Minister Hussein al-Shahristani as saying at the signing ceremony.
The oil field is expected to produce over 110,000 barrels of oil per day, which will be supplied to the Zubaiduyah power plant, "and the surplus would go for export," the minister added.
China and Iraq signed their first oil deal in 1996, during Saddam Hussein's rule. However, it never got off the ground and was postponed indefinitely after the UN imposed economic sanctions on the country and the U.S.-led invasion in 2003.