BAGHDAD- Iraq signed a contract with China's state-run Zhenhua Oil for the development of the southern portion of the East Baghdad oilfield, the oil ministry said in a statement on Wednesday.

Oil Minister Jabar al-Luaibi said the project was of economic importance to Baghdad as this is the first oil project in the capital, the statement said.

(Reporting by Raya Jalabi; editing by Jason Neely) ((Raya.Jalabi@thomsonreuters.com;))