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Iraq in major oil field auction Shell wins Iraq oil field rights
(about 10 hours later)
The world's biggest oil companies are gathering in Baghdad to bid for the rights to develop Iraq's oil fields. A joint venture between the UK's Shell and Malaysia's Petronas oil companies has won the right to develop Iraq's giant Majnoon oil field.
A total of 44 companies will bid for 10 fields in the second live auction to take place this year. A total of 44 companies are bidding for 10 fields in the second such auction since the invasion in 2003.
Eight contracts to run oil and gas fields were up for tender in June, although only one was agreed - with BP and China's CNPC. Shell and Petronas beat a rival bid from France's Total and China's CNPC.
The auction comes three days after a series of car bombings killed more than 100 people in Baghdad. Although Majnoon is a huge oil field, with reserves of 13 billion barrels of oil, it currently produces just 46,000 barrels per day.
Disputed terms Shell and Petronas have pledged to increase that output to 1.8 million barrels per day.
The auction is key to Iraq's goal of reviving its oil industry, which has been battered by years of war and sanctions. Their venture will receive a fee of $1.39 a barrel. In June this year, a winning bid to develop an Iraq oil field received $2 a barrel.
Foreign expertise
Also on Friday, a consortium led by China's CNPC was awarded the contract for Iraq's Halfaya oil field. The consortium also includes Malaysia's Petronas and France's Total.
It requested fees of $1.40 a barrel of oil extracted from the field, and projected output would reach 535,000 barrels per day.
Halfaya, in southern Iraq near the border with Iran, is a much smaller field with reserves of 4.1 billion barrels of oil.
Iraq needs the expertise of foreign companies in order to reach its goal of reviving its oil industry, which has been battered by years of war and sanctions.
The country has a daily output of about 2.4 million barrels, but aims to triple that over the next few years.The country has a daily output of about 2.4 million barrels, but aims to triple that over the next few years.
However, the first auction led to a dispute between many of the bidding companies and the Iraqi government over the terms of the contracts.
Many could not agree on how much the oil ministry should pay above the minimum production level.
Only BP and CNPC agreed a contract - to run the Rumaila oil field - Iraq's first big oil tender since the invasion of 2003.
Exxon Mobil had earlier declined to accept the ministry's maximum payment on Rumaila, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel.
Since then, a consortium led by the Italian firm ENI, and Shell and Exxon Mobil have also signed deals.