Iraq, the holder of the world's third-largest oil reserves, has opened nearly 90 percent of its reserves to international oil companies for development in two major postwar bidding rounds through 2008.
The war-plagued country, with at least 115 billion barrels in reserves, plans to add 4 million to 4.5 million barrels a day to its current 2.4 million bpd within four to six years to help build its heavily damaged infrastructure and develop its economy.
On Wednesday, Oil Minister Hussein al-Shahristani kicked off the country's second postwar bidding round, naming 11 oil and gas fields or groups of fields as eligible for development proposals.
Top on the list are the giant Majnoon and West Qurna Phase 2 fields, which hold reserves of at least 12 billion barrels each. The two fields currently produce far below their individual output potential of 600,000 barrel per day.
Others in the list are the Halfaya, Gharraf and Badra oil fields and the Siba gas field in southern Iraq. In the center of the country, the East Baghdad field and the group of Kifl, West Kifl and Merjan were offered on Wednesday.
Also on the list were the eastern Iraq grouping the Qamar, Gullabat and Naudman oil fields and the Khashm al-Ahmar gas field, along with the Qayara and Nejma oil fields in the north.
"We kicked off this round in response to the country's need to increase its crude production to increase its hard-currency income in light of sinking world oil prices," al-Shahristani told a news conference.
Al-Shahristani said only 15 of 78 known oil and gas fields have been brought into production and said many desert areas in western and southern Iraq also have yet to be explored.
A drop in oil prices to under $40 per barrel from a summertime high of about $150 has hit Iraq hard; the country depends on oil revenues for nearly 95 percent of its budget. As a result, the government was forced to slash its 2009 budget from $80 billion to $67 billion and is considering a further reduction.
On Wednesday, light, sweet crude for February delivery was trading electronically on the New York Mercantile Exchange at $37.96.
"These are of course worrying prices not only for Iraq but also to all oil exporting countries," al-Shahristani said, adding that more cuts could be considered by OPEC when it next convenes in March.
In June, Iraq opened its first postwar round of bidding for contracts to develop six major oil fields and two gas fields, choosing 34 of 120 oil companies that applied to participate. Among those selected were international energy giants Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp., Chevron Corp. and Total.
The companies will offer a long-term service contract in which they will be paid flat fees for their services and not the most preferable one which is production-sharing contract.
The ministry plans to sign the contracts of the first round in mid-2009 while the second round end of the same year, al-Shahristani said.