PetroChina Co, China's largest oil explorer, may join with United States-based energy giant Exxon Mobil Corp to co-develop the West Qurna oilfield in Iraq, which would make the Chinese company the biggest single foreign investor in the Iraqi oil industry.

An industry source close to the company confirmed to China Daily that the two companies are holding talks, but added: "It is not a good time now to release the details of the ongoing talks."

PetroChina workers check gas supply facilities at an oil and gas field in Hotan, in the Xinjiang Uygur autonomous region. The company is reported to be in talks with Lukoil, a Russian oil producer, to jointly develop the West Qurna-2 project in Iraq.WANG FEI / XINHUA

The company has also been reported to be holding talks with Lukoil OAO Holdings, Russia's second-biggest oil producer, over joint development of the stalled West Qurna-2 project, which is now operated by Lukoil.

The West Qurna field has the potential to produce more than 5 million barrels of oil per day, enough to rival the Ghawar field in Saudi Arabia, the world's largest producing field.

The oilfield also plays a vital role in realizing Baghdad's ambitious plan to boost its oil production to 12 million barrels per day by 2017 from about 3 million bpd at present.

It was rumored last year that Exxon Mobil might sell its stake in the $50 billion project. Baghdad was displeased by the company's move to sign contracts with the semi-autonomous Kurdistan region, which is deemed illegal by the central government of Iraq.

However, the US oil giant later committed itself to further investment in the project.

If a deal materializes, it will not be the first instance of cooperation between the two huge energy players.