Iraqi and Chinese officials have cut the ribbon on one of the first foreign oil projects in southern Iraq, with American military officials saying it would help bring economic development to the region.

The Ahdeb oil field in Wasit province is expected to produce an estimated 110,000 barrels per day, according to the U.S. military and the Chinese National Petroleum Co.

The Chinese Xinhua News Agency reported the deal to be worth around $2.9 billion.

The deal had originally been signed during Saddam Hussein’s rule in 1996, but was postponed due to U.N. sanctions and then the American-led invasion in 2003. The deal was resurrected in November 2008, officials said.

Making the most of Iraq’s oil resources is considered particularly important amid falling oil prices. The Iraqi government cut its 2009 budget by around 7 percent because oil prices have dropped.

The Ahdeb oil project is southwest of Forward Operating Base Delta and will share some of the same facilities and support companies used by the base.

"This project will provide a number of jobs and opportunities for investment, which will provide the province with electricity and power to operate the power station in Zurbadiyah and to help to contribute to the development and prosperity of this province," Hussein Al-Shahristani, Iraq’s oil minister, said about the deal.

"This is the first investment project in Wasit and we hope it will last a long time."

U.S. military officials said they hoped the development projects demonstrate security in the province has improved to the point more investors can be attracted.

"Being a partner with the local Iraqi Security Forces, we will help them if they have any challenges and be an enabling force in the superb Iraqi Security Force efforts in providing continued security to the province," Col. Richard Francey, commander of FOB Delta and the 41st Fires Brigade, said in an Army news release.

"The security is set for many others to come here. The Chinese just happen to be the first," he added. "This is a good thing in the long run for the province and the Iraqi people."

Iraqi officials have said they want to increase oil production to 6 million barrels a day by 2016, largely through partnerships with foreign countries. The Chinese will help develop the oil field and production.

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