The Iraqi government has give the go-ahead for a multi-million pound upgrade to one of the country's leading oil refineries as it looks to arrest a decline in export rates.

According to a senior official at the country's Oil Ministry, an $81 million agreement has been reached with the US-based Colorado Industrial Construction Services Co. (CICSCO) and CH2M HILL's affiliate VECO for the increased production of gas and oil at the Samawah refinery, in the south of the country.

Though neither of the two private firms has yet to released details of the deal, the International Herald Tribune has learned that the initiative is expected to allow the refinery to produce up to 1,200 cubic metres of natural gas a day by 2010.

Mohammed Ali Hussein, manager at Samawah, told the US newspaper that a third unit is also due to be added to the refinery after it is taken from a plant which is being decommissioned in Baghdad, around 230 miles away.

At present, Iraq has the world's third-largest known crude oil reserves, with estimates pointing to a possible 115 billion barrels.

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