Iraq began auctioning contracts to develop its rich oil and gas fields, in an effort to raise more revenue to rebuild the war-torn country.   A consortium of foreign companies including British Petroleum and China's CNPC accepted a contract to expand production in the largest oil  field on offer but other companies were asking for more than Baghdad was willing to offer. 

After more than six years of war, 32 companies competed for contracts to operate eight of Iraq's largest oil and gas fields.

Although competition was fierce, Oil Ministry spokesman Assim Jihad says the country's first oil auction in 30 years produced just one deal. "The first contract has been settled and won by a consortium of the British company BP, and the Chinese company CNPC to develop al Rumaila oil field," he explains. "We are still in the process of announcing contracts for the other oil and gas fields and waiting for competition from global companies."

Iraq's Oil Ministry offered companies $2 per barrel for any crude they produce above a minimum production target.

But some companies asked for at least twice that amount.  As a result some of Iraq's smaller oil fields attracted no bidders at all.

The tender has sparked fierce debate in the country, which relies on oil for 95 percent of its state revenues.

The government says the contracts could bring nearly $2 trillion to Iraq over the next twenty years.  But some critics fear foreign companies will plunder Iraq's oil.

"Now, there'll be a surge of companies. These companies aren't coming for the sake of Iraq.  They have their own policies which will definitely influence Iraq's sovereignty," said Farouq Mohammed Sadeq who represents the country's oil producers.

Recognizing the security challenges of operating in Iraq, some companies apparently raised their fees.  

But energy expert Walid Kurdi says the lure of Iraq's oil riches is too great to pass up.
"Obviously the security situation is clearly an issue," he said. "This is something for the authorities and the companies involved to arrange for their own security.  But on balance, the returns from the investment are well worth it."

Iraq has the world's third largest oil reserves, with an estimated 43 billion barrels of crude.