Shell signed a memorandum of understanding with CNPC last month and is now discussing details of the official joint bid agreement to develop the Kirkuk oil field, a source close to the deal, who declined to be named, told Dow Jones Newswires.

Sinopec will also join the consortium.

"Shell, CNPC and Sinopec will together own a 75% stake if the bid is successful. CNPC will have 15%, Sinopec is likely to have a similar interest," the source added.

The remaining 25% interest will be held by a state-owned Iraqi operator, according to Iraq's model contract for the eight oil and gas fields offered to international oil companies in the first bidding round.

The winners will be decided in Baghdad around 30 June.

Last month, Jeroen van der Veer, Shell's chief executive, confirmed the Anglo-Dutch supermajor was in talks with Chinese players to be a part of the consortium bidding for an Iraqi oilfield.

Shell spokesperson Li Lusha declined to comment beyond van der Veer's comments in April.

Spokespersons for CNPC and Sinopec were not immediately available for comment.

Iraq is desperately seeking to boost production and renew an industry that has been shackled by years of war, sanctions, underinvestment and violence.

Iraq, with oil reserves exceeding 115 billion barrels, the world's third largest, produces only 2.4 million barrels a day.

According to Global Insight, the current oil production capacity of the Kirkuk field is 285,000 barrels per day.

However, daily production is forecast by Global Insight to have risen to 415,000 barrels at the time of the contract award, with a longer-term target of 600,000 barrels once the international oil companies get to work.

CNPC has already built a relationship with the Iraqi government.

In March, it secured the first major oil development deal with Iraq since the fall of Saddam Hussein in 2003.

The $3 billion project is to develop al-Ahdad oil field in Wasit Governorate, south of Baghdad.

Published: 14 May 2009 17:52 GMT  | Last updated: 15 May 2009 06:34 GMT