French engineering group Alstom is in exclusive talks to build a high-speed rail line between Baghdad and Basra in Iraq, French junior transport minister Thierry Mariani said Friday.

"Alstom and the Iraqi railway have signed a memorandum of understanding to build a high-speed rail line between Baghdad and Basra," Mariani told journalists at the Paris International Airshow.

The two will hold exclusive talks for 12 months to try to wrap up a final agreement.

An Alstom spokesman confirmed the agreement, and said they were seeking a deal that would include the construction of the rail line plus trains and service.

The spokesman said the 650-kilometre rail network would handle speeds of up to 250 kilometres per hour (135 mph).

The network would include a 150 kilometre link between Baghdad and Basra and serve the cities of Karbala, Najaf, Moussayeb and Samawah.

Mariani said he would travel to Iraq in September or October to discuss the possible deal.

No financial details were immediately available.

In May, Alstom announced a separate preliminary deal to build a 25 kilometre elevated commuter train network in Baghdad.