Iraq Opens Oil, Gas Fields to Foreigners

Under the service contracts, the companies would be paid a per barrel fee for any crude they produce in excess of a minimum production target.

Both groups were asked to revise their bids, said Oil Minister Hussain al-Shahristani, because they were asking for more money per barrel than the government wanted.

Under the service contracts, the companies would be paid a per barrel fee for any crude they produce in excess of a minimum production target. The Exxon Mobil-led consortium requested $4.8 per barrel for production over the minimum while BP wanted $3.99 a barrel, al-Shahristani said, while the ministry was willing to pay $2 a barrel.

BP agreed to match the ministry's price and won the contract for Rumaila, said al-Shahristani. Exxon Mobil had refused to revise its bid, he said.

No bids were offered on the second field on offer, Mansouri.

The field, located in the restive Diyala province, is an undeveloped gas field estimated to hold 3.3 trillion cubic feet of reserves with production potential of 330 million cubic feet a day. That province has weathered some of Iraq's worst violence.

Iraqi officials have estimated that based on crude oil at $50 a barrel, the companies could earn around $16 billion in total while Iraq would bring in over $1.7 trillion.

The process, however, has been mired in controversy linked to Iraq's ethnic and sectarian political divides. Lawmakers opposing the licensing round say the contracts would be unconstitutional since the parliament will not be allowed to ratify them.

Al-Shahristani has said he wants the cabinet of ministers to approve the deals, instead, and that the process will be completely transparent.

But much of the ire basically stems from the country's various groups vying for a slice of the oil revenue, with the Kurds in the semiautonomous north particularly disgruntled at the central government's insistence that the deals they signed earlier with international oil companies are illegal.

Further complicating the effort is the lack of a national oil law. Some analysts have said this could leave oil companies vulnerable to having their contracts voided by a subsequent government.