Iran and Iraq have signed a major petroleum cooperation agreement amid expanding ties between the two energy-rich neighbors.

Iraq�s Prime Minister Mohammad Shia al-Sudani watched on as Iranian and Iraqi oil ministers signed a deal in the Iraqi capital Baghdad on Thursday to facilitate bilateral cooperation on petroleum industry projects.

Iranian Oil Ministry�s news service Shana said that a joint working group will pursue the implementation of the agreement during regular meetings in the future.

It said Oil Minister Javad Owji had held extensive talks with premier Sudani earlier in Wednesday to discuss an array of petroleum industry issues ranging from oil fields shared between the two countries to Iraq�s access to technical and engineering services from Iranian companies.

A separate report said that Sudani and Iraqi oil minister Hayan Abdul Ghani had emphasized in their meetings with Owji the need for increased cooperation with Iran on the issue of natural gas.

Iran is a major supplier of natural gas to Iraq as the Arab country, which is the third largest crude oil exporter in the world, still struggles with rising demands for natural gas in its power plants.

Recent reports have suggested there has been an increase in the supply of natural gas from Iran to Iraq.

Iranian authorities say Iraq has settled a part of the huge debts it owed to Iran for previous gas supplies.

By Press TV