The "Kurdistan Gas City" is due to attract around 40 billion dollars in foreign direct investments, while initial investments in infrastructure will amount to three billion dollars, the official WAM news agency reported.

It will be built on a 461 million square feet site (nearly 43 million square metres) assigned by the Kurdistan Regional Government, the agency said.

The project will feature industrial, commercial and residential zones, as well as 20 different petrochemical and heavy industries.

Hamid Jafar, chief executive of Dana Gas, a private-sector natural gas company, said he expected the project to create 200,000 job opportunities.

The two firms have built already 80 percent of a network of 180-kilometre (112 miles) gas pipelines, as well as two liquefaction plants to feed power installations in northern Iraq, WAM said.

The two plants are expected to start daily gas production of 150 million cubic feet (4.24 million cubic metres) within a few weeks, it said. Production should double in early 2009.

While the US-backed government of Iraq continues to battle insurgencies in various parts of the war-torn country, the autonomous northern part has enjoyed relative stability.