Iraq has approved an oil exploration deal with a Kuwait-led group, a statement said Thursday, replacing a previous agreement with a Turkish firm that was torpedoed amid worsening ties with Ankara.

The cabinet agreed to replace Turkey's TPAO with Kuwait Energy for a 900-square-kilometre (347-square-mile) exploration block in south Iraq, near the country's border with Iran.

"The cabinet decided... to approve the adoption of the recommendations of the energy committee regarding... signing exploration block number nine's contract with a coalition of Kuwaiti and Emirati companies," a statement said.

Kuwait Energy will up its stake in the project to 70 percent, with Dragon Oil of the United Arab Emirates holding the remainder.

The original consortium of TPAO, Kuwait Energy and Dragon Oil had won the exploration contract for the block in a May 30-31 public auction in which they agreed to be paid a service fee of $6.24 per barrel of oil equivalent eventually extracted.

It is one of several agreements between Baghdad and foreign energy firms to boost oil output and explore for new deposits of energy as Iraq looks to cement its role as a key global oil supplier.

Officials announced TPAO would be expelled in November due to "non-technical issues", one of several signs of worsening ties between Baghdad and Ankara.

The two countries have been at odds over the Syrian conflict and Iraq has publicly urged Turkey to hand over fugitive Vice President Tareq al-Hashemi, who has been sentenced to death in Baghdad on charges of running a death squad.