The agreement, reached at the South Korea-Iraq summit held earlier in the day, comes as Seoul has pushed to raise its self-sufficiency in fossil fuel resources in recent years.
As of last year, the country had secured overseas oil and natural gas fields equal to 10.8 per cent of the annual domestic demand.
The Ministry of Knowledge Economy said the bilateral economic and energy cooperation agreements effectively allowed Seoul to bring in oil equivalent to around 10 percent of its daily demand.
If the amount is calculated on a yearly basis, the total is equivalent to 91.25 million barrels of crude. This is sufficient to raise South Korea's emergency fuel reserve to 18.8 per cent of domestic demand, it said.
"A joint panel will be set up to iron out details of the agreement that includes when South Korea can exercise its rights to import Iraqi oil," said Moon Jae-do, head of the ministry's resources development office. He stressed that the deal is significant because Iraq is the third-largest producer of crude oil in the world and the sixth-largest supplier of fossil fuel resources for South Korea in 2010.
South Korea bought 60 million barrels of crude from the Middle Eastern country equal to 6.9 per cent of the total.
In 2010, the country bought 872 million barrels of crude oil worth USD 68.68 billion.
In addition, the official said Baghdad has agreed to permit South Korean energy companies a chance to bid for four oil and gas fields that were not awarded to any company in the 2009 open bid. The combined reserves of the four fields is estimated at 6.2 billion barrels equivalent of crude oil.
The ministry, meanwhile, said the latest pact could help local companies bid for seven gas wells and five oil fields in which Iraq is expected to sell stakes in early 2012 and the Karbala oil refinery construction project.
South Korean companies such as STX and SK Energy Co.
have all expressed interest in building industrial plants, refineries, fertilizer factories and steel mills in Iraq which is trying to recover from war and domestic unrest.