(Adds names of officials, background)
BAGHDAD, Dec 20 (Reuters) - A group led by Royal Dutch Shell , Europe's largest oil company, signed an initial deal on Sunday to develop the supergiant Majnoon oilfield.
Shell, along with Malaysia's state-run Petronas, won the rights in an energy auction earlier this month for the field, a major oil prize near Iraq's southern oil hub of Basra.
Mounir Bouaziz, a senior Shell executive, and Abdul-Mahdy al-Ameedi, deputy director of the Oil Ministry's licensing office, signed the initial agreement in downtown Baghdad. It must now be sent to the cabinet for approval.
Majnoon has reserves of 12.6 billion barrels, making it one of the world's largest untapped oilfields.
Iraq is hoping a host of deals in the works will turn the country into a major global energy player and increase output capacity to 12 million barrels a day (bpd) in six or seven years, hard on the heels of global leader Saudi Arabia.
Oil officials have been in a triumphant mood since the Dec. 11-12 auction which awarded seven contracts to foreign firms.
For Majnoon, the Shell group proposed a per-barrel remuneration fee of $1.39 and pledged to increase output to 1.8 million bpd from a current production level of 45,900 bpd.
Shell has a 60 percent stake in the consortium, while Petronas holds 40 percent.
(Reporting by Muhanad Mohammed; writing by Missy Ryan; editing by John Stonestreet)