Grand Faw Port on Al-Faw Peninsula is intended to provide a new freight link between Asia and Europe via upgraded rail and road infrastructure through Iraq and Turkey.
Dubbed the Iraq Development Road, the mega project is expected to cost some $17 billion.
The first phase of work on the new port, intended to supplement the existing docks in the port city of Al-Faw, is expected to be completed next year by South Korean construction giant Daewoo Engineering.
Sudani said the new port would make Iraq part of the "global trade and transport routes that pass through the Middle East".
"The project will transform Iraq from a country dependent on the ports of others to a maritime state with a full presence on the Gulf," he said.
Daewoo has built a nearly 16 kilometre (10 mile) long breakwater in the Gulf to protect the port -- the world's longest, according to Guinness World Records.
A tunnel connecting Al-Faw Peninsula to the Iraqi port of Umm Qasr is half complete, the prime minister said.
