The Iraqi government has approved a contract with a British-Chinese consortium to develop a prized oil field in southern Iraq, a significant achievement for a country that has struggled to attract foreign investors despite its vast natural resource wealth.

The deal was the only one to emerge from a disappointing bidding round in June offering development rights for six oil and two gas fields.

It was Iraq's first such bidding process in more than three decades, but foreign firms felt the prices set by the government were too low given continued violence in the country and disputes over natural resource control.

But things have been looking up in recent days for Iraq's hope to use increased oil revenue to recover from years of war and sanctions. Earlier in the week, three international consortiums agreed to meet the Iraqi government's price to develop oil fields in the country.

Even more important is the Iraqi Cabinet's approval of the bid by Britain's BP Plc and its Chinese partner CNPC to develop the 17.8 billion barrel Rumaila field near the southern city of Basra. The deal was approved late on Friday, Iraqi government spokesman Ali al-Dabbagh said, without providing further details.

According to the agreement, BP will hold a 38 percent stake in the venture and CNPC will have a 37 percent share. Iraq's State Oil Marketing Organization will control the rest.

"It is a very important event ... very promising for Iraq," said Samuel Ciszuk, an energy analyst with London-based IHS Global Insight. "The huge incremental this project alone could bring in a relatively short period of time ... is very important."

Iraq has the world's third-largest known oil reserves, and crude exports are the country's most important source of revenue. But Iraq's current daily output of 2.4 million barrels is far below the country's potential.

Iraq's oil industry has been hampered by years of wars, sanctions and sabotage attacks by insurgents after the 2003 United States-led invasion.