Iraq expects to gross $55 billion in a new 20-year oil deal it recently renegotiated with China, the government said.

"Iraqi gross revenues obtained in the contract will be $55 billion, equal to 87 percent of total revenues of $63 billion," government spokesman Ali Al-Dabbagh said in a statement.

The estimate of Iraq's take in the $3 billion service contract for the Ahdab oil and gas field south of Baghdad is based on projected oil prices of $100 a barrel.

The Iraqi government recently renegotiated the terms of the deal with the Chinese National Petroleum Company (CNPC), which was originally signed in 1997, marking Iraq's first major oil deal with a foreign firm since the fall of Saddam Hussein.

The government of Iraqi Prime Minister Nuri Al-Maliki formally approved the renegotiated contract this week, and said it now hopes Chinese officials will sign the renegotiated contract in Baghdad later this month.

Al-Dabbagh said the deal, which is also to include gas extraction and processing, would have an investment value of $3 billion and an operating cost of $4 per barrel.

"The contract aims to produce from the beginning of the fourth year ... an average of 25,000 barrels per day (bpd)," Al-Dabbagh said, detailing decisions from a recent cabinet meeting.

From the seventh year, the contract aims to produce an average of 115,000 barrels per day, he said.

Part of the deal, as Iraq struggles to boost electricity supplies that consistently fall far short of demand, is an agreement to pipe energy to the Al-Zubaidiya power station in Wasit province, where the Ahdab field is located.

The deal with CNPC, the parent company of PetroChina and Asia's biggest oil and gas company, comes as world oil majors are angling for long-term deals with Iraq, which has the world's third-largest proven oil reserves.

Yet negotiating with Iraq may not be easy. In renegotiating the Ahdab deal, Iraq secured more favourable terms, changing the contract from a production sharing agreement to a set-fee service deal.

Al-Dabbagh said the new terms would, if oil prices stay around $100 per barrel, give Iraq at least an additional $2.5 billion over the life of the deal compared to the previous terms. - Reuters