Japan's Nippon Oil Corporation and partners have a good chance of winning a contract to develop the Nassiriya oilfield but negotiations are continuing over the financial terms of the project, Iraqi officials have said.

Japanese state banks backing the consortium in its bid for the super giant oilfield will meet Iraqi Oil Ministry and Finance Ministry officials next week in Istanbul, said Iraq's Deputy Oil Minister Ahmed Al Shamma, according to a report in our sister newspaper Gulf Daily News.

The head of the legal and commercial section of the Iraqi Oil Ministry's petroleum contract and licensing directorate Sabah Abdul Kadhim said there were 'good developments' in the discussions with the Japanese but 'no final deal.'

'There is a coming together of viewpoints between us and the Japanese, but there are some issues that need more discussion,' Kadhim said. 'There is the possibility that an agreement could be reached.'

Asked if the chances of Nippon and its partners oil explorer Inpex Corporation and plant engineering firm JGC Corporation were good, he said. 'Yes, we could say that, why not?'

Iraqi officials say a sticking point in negotiations is Iraq's desire for income from the development of Nassiriya not to be paid into the Development Fund for Iraq (DFI), which is the principal repository for Iraq's oil-export revenues.

The DFI is audited by the International Advisory and Monitoring Board under a UN resolution.

The Nippon-led consortium is competing with Italy's Eni to develop Nassiriya. Iraqi oil officials say it has a capacity to produce 100,000 barrels per day within 18 months while Eni executives have previously said they saw a potential eventually for production to reach one million bpd.

Spain's Repsol had also been invited to bid but has dropped out of the race.