Nippon Oil of Japan and partners have obtained a basic agreement to develop Iraq's huge Nassiriya oil field, Japan's Kyodo news agency said on Tuesday, citing sources involved in the negotiations.

The group and Iraq have signed a memorandum of understanding as they have solved the biggest hurdle on financing issues, the report said.

The announcement will be made in September, the report said, quoting Iraq's Deputy Oil Minister Abdul Karim Louaibi.

A Nippon Oil spokesman in Tokyo declined to comment.

'Various negotiations are under way and we are making progress. But we are not aware at this point that a final agreement has been reached,' an official at Japan's trade ministry in Tokyo said.

Louaibi said on Monday that Nippon Oil and partners were 'very close' to winning the contract after a deal was reached on financing.

Nippon Oil Corp and its partners -- oil explorer Inpex Corp and plant engineering firm JGC Corp -- are vying with Italy's Eni to develop Nassiriya, which Iraqi officials say has a capacity to produce 100,000 barrels per day within 18 months. – Reuters