BAGHDAD - Iraq and China signed a $3 billion deal this week to develop a major Iraqi oil field, the first major commercial oil contract with a foreign company since the 2003 U.S.-led invasion.

The 20-year agreement calls for state-owned China National Petroleum Corp. to begin producing 25,000 barrels of oil a day, then gradually increase to 125,000 a day, said Asim Jihad, a spokesman for the Iraqi Oil Ministry. The contract revamps a deal the Chinese company reached with Saddam Hussein in 1997 to develop the Ahdab oil field in Wasit province, south of Baghdad near the Iranian border. But unlike that deal, which called for China to share in the revenues, the current contract is based on a fixed-fee structure.

Western oil companies this summer came close to reaching an agreement with the Oil Ministry to return to Iraq. Those deals were for smaller technical service contracts that involved giving advice on how to boost production. The China deal is a contract that is more lucrative and involves large-scale development of the field.

The deal with China rebuts concerns that the U.S. government was manipulating the process to benefit American corporations, Jihad said. "We hope this will refute all the rumors that say the American companies are the only ones benefiting from the American occupation," he said. The contract also requires China to build a major electrical station in the area to help boost Iraq's overworked power grid.

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