A Russian consortium including oil group LUKOIL (LKOH.MM) signed a $3.7 billion deal to develop Iraq's West Qurna oil field in 1996, when Saddam Hussein was in power.
"The goal has been set to restore the contracts concluded between Russian and Iraqi companies before the war," Energy Minister Sergei Shmatko said, adding that a working group on the issue would convene in the near future.
"I believe that this is a very big move," he told reporters after the meeting between Russian Prime Minister Vladimir Putin and Iraq's Nuri al-Maliki in Moscow, at which Putin accepted an invitation to visit Iraq.
Saddam's government tore up the LUKOIL deal in 2002, months before the invasion, saying the Russian company had done no work at West Qurna since signing it and had failed to fulfil its contractual obligations.
Russia opposed the invasion in 2003. LUKOIL has since lobbied for the current government to honour Saddam-era contracts.
JP Morgan said in March last year that, according to Russian estimates, production at the field was expected to peak at 700,000 barrels per day, and reserves could total 4.5-7.3 billion barrels.
Russia agreed last year to write off most of Iraq's remaining $12.9 billion debt and signed a separate deal to open up the country to $4 billion in investment from Russian firms, but the agreement did not help LUKOIL win back the Qurna deal.
Iraq has previously said LUKOIL would have to compete with other firms for the contract. But Baghdad has renegotiated and signed another Saddam-era deal, with the Chinese National Petroleum Company.
"Iraq remembers well Russian companies which had helped us in different areas including the oil and gas industry ... We are convinced the Russian companies can and should be our important partners," Maliki said in a statement.
Iraq last year opened up some of its most prized oil and gas fields to international firms that have been excluded for decades, part of new deals that could more than double its output within a few years.
Shmatko said Putin had received guarantees that Russian companies would receive equal treatment in drilling and oil services tenders announced by the Iraqi government.
The two countries also signed an agreement for a $150 million, mainly World Bank-financed, renovation of the Hartha power plant near the southern oil hub of Basra. The 18 to 24-month contract involves the rehabilitation of two units that provide 400 megawatts of power.
Most Iraqis still depend on generators for much of their electricity needs, six years after the U.S. invasion. U.S. and Iraqi officials say the restoration of basic services like power is essential to ward off public frustration that could undermine recent security gains.
