Iraq's cabinet has approved an $843 million service contract with US oilfield services company Weatherford to build crude production units in the Zubair oilfield.

Italy’s Eni, US-based Occidental Petroleum Corporation and South Korea’s Kogas had signed a 20-year deal with Iraq to develop Zubair. They set an eventual output target of 1.2 million barrels per day (bpd) by 2017.

Under the contract, Weatherford is to construct six crude production units, each with the capacity to process 50,000 barrels per day. The duration of the contract is 18 months, the cabinet said in a statement on Tuesday.

Zubair is currently producing around 254,000 bpd and output is expected to increase by 100,000 bpd by the end of 2012.

Iraq has awarded massive oilfield development contracts to majors such as Royal Dutch Shell and BP with the ambitious target of expanding its oil production capacity to 12 million bpd by 2017. Most analysts see 6-7 million bpd as more realistic.

Current export infrastructure is outdated and lacks the capacity to handle Iraq's future expected output raise. Iraq is currently exporting an average of 2.4 million barrels per day and expects to export 2.5 million bpd in 2012.-Reuters