Canada's Talisman Energy has finally completed the signing of two oil contracts with the government of the autonomous Kurdish region, in spite of prolonged opposition from the Iraqi central government.

In return for the new contracts, the firm has announced that it will invest around £110 million as part of its ongoing social responsibility programme in Kurdistan, aimed at improving the infrastructure in a region which suffered especially heavily under the Saddam Hussein regime.

Under the agreement, Talisman will provide a 40 per cent stake in the Kalar-Bawanoor block, with an additional 40 per cent already held by another Canadian firm WesternZagros and the remainder by the regional government.

In addition, the company will also undertake a two-year exploration programme in a separate block, located close to the town of Halabja.

A statement released by the Kurdish government added: "The service agreement grants Talisman an option to take up a long-term production-sharing contract after two years, in which they will hold a 60-percent participation interest."

At the same time, officials in Baghdad have also revealed that it is set to award contracts to 41 foreign oil companies as it moves to increase production levels.