The┬ásecond round of bidding opens today for contracts to develop the worldÔÇÖs third-largest oil reserves in Iraq.
More than 40 international oil companies will gather in Baghdad to bid for the 20-year service contracts to work on 10 oil fields and one gas field in the country.
The largest oil fields include East Baghdad, West Qurna 2 and Majnoon, which contain reserves of 8.1 billion, 12.9 billion and 12.6 billion barrels of oil respectively.
The oil majors bidding include BP, Royal Dutch Shell, Total, Chevron, ConocoPhillips and Gazprom. Competition is expected to be fierce despite concerns over security and political instability.
The first round of bidding for contracts in June was blighted by the tough terms and tight financial conditions laid out in the auction and the failure of IraqÔÇÖs government to pass a hydrocarbons law setting out the terms of any investment.
In that round only one contract was awarded, to China National Petroleum Corp and BP to work on Rumaila oil field.
However, confidence has risen in recent weeks following deals with two consortiumsÔÇöExxon Mobil with Shell and ItalyÔÇÖs Eni with Occidental Petroleum Corp and Korea Gas CorpÔÇöto work on the West Qurna 1 and Zubair oil fields.
The fields in this round of bidding are all undeveloped, which means that companies will be able to use their own high-tech equipment, maximising the benefits from each project.
In general, Iraq's oil fields are technically easy and relatively cheap to develop. However, the drilling process usually requires significant amounts of water to maintain pressure, a frequent problem in the drought-stricken country.
The Iraqi government has reportedly assured potential investors that it will ensure there is a constant supply of water for the projects.
Success at today's auction could add another three million barrels a day to Iraq's oil output. The countryÔÇÖs oil ministry has said it is aiming for 10 million barrels a day, which would put Iraq on a par with Russia and Saudi Arabia.
The auction offers international oil majors a rare opportunity to develop reserves in the Middle East, with other countries such as Saudi Arabia and Iran remaining closed to foreign investors.
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