This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8125731.stm

The article has changed 8 times. There is an RSS feed of changes available.

Version 4 Version 5
Iraqi oil for sale in TV auction Iraqi oil for sale in TV auction
(about 2 hours later)
A bid from Britain's BP and China's CNPC has won the first contract in the live televised auction for contracts to run oil and gas fields in Iraq.A bid from Britain's BP and China's CNPC has won the first contract in the live televised auction for contracts to run oil and gas fields in Iraq.
Six oil fields and two gas fields are available in the first big oil tender in Iraq since the invasion of 2003.Six oil fields and two gas fields are available in the first big oil tender in Iraq since the invasion of 2003.
They consortium took the contract for the 17 billion barrel Rumaila field after Exxon Mobil rejected the oil ministry's maximum service contract. The consortium took the contract for the 17 billion barrel Rumaila field after Exxon Mobil rejected the oil ministry's maximum service contract.
An undeveloped gas field has also been offered but there were no bidders.An undeveloped gas field has also been offered but there were no bidders.
The top bidders for two other oil fields are considering whether to accept the ministry's maximum payment. The oil ministry is offering 20-year service contracts to extract oil or gas from the fields.
Under the service contracts, successful bidders will be paid a certain amount for each barrel they produce above a specified minimum production level. There are 31 oil companies that have been approved as potential bidders.
Red envelope
For each field, the ministry has specified a minimum production level, which is close to the amount that is currently being produced.
The bidders will not be paid for anything up to the minimum production level - but they say how much they want to be paid for each barrel produced above the minimum, and also predict how much oil they will be able to produce.
From that, the auctioneers pick a winning bidder.
However, there is another twist. In a red envelope, the auctioneers have the maximum amount that the oil ministry is prepared to pay.
So far, those amounts have been significantly less than the oil companies are asking for, so the winning bidders have been asked to cut their prices.
In the case of the Rumaila field, Exxon Mobil declined to accept the ministry's maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel.
They will also be able to charge the ministry for the costs of the work they have to do on the production facilities.
The contracts are subject to approval by the cabinet.
Other winning bidders are deciding whether to accept the ministry's maximum payments.
Raising productionRaising production
The 20-year contracts have attracted interest from 31 oil firms including Exxon Mobil, Royal Dutch Shell and Total. Before the auction, Iraqi officials said companies from nations involved in the 2003 invasion would be neither favoured nor disadvantaged.
Iraqi officials say companies from nations involved in the 2003 invasion will be neither favoured nor disadvantaged.
The auction was originally planned for Monday but had to be delayed because of sandstorms in Baghdad.The auction was originally planned for Monday but had to be delayed because of sandstorms in Baghdad.
"Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years," Oil Minister Hussein al-Shahristani told Iraqi public television."Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years," Oil Minister Hussein al-Shahristani told Iraqi public television.
Iraq has the world's third-largest proven oil reserves with 115 billion barrels, of which the fields up for auction account for about 43 billion barrels.Iraq has the world's third-largest proven oil reserves with 115 billion barrels, of which the fields up for auction account for about 43 billion barrels.
But there has been some controversy about the auction, with members of the Iraqi parliament objecting to not having the chance to approve the deals.But there has been some controversy about the auction, with members of the Iraqi parliament objecting to not having the chance to approve the deals.