BP and China National Petroleum Corp. have won a contract for the development of Iraq’s Rumaila oil field, the first of eight giant Iraqi oil and gas development projects for which Iraq began receiving bids Tuesday, Iraqi officials said.

Selected foreign companies including international oil majors and Japanese companies are making bids.

Iraq is offering contracts to foreign companies for the first time in around 40 years since its energy industry was nationalized.

The eight projects involve six active oil fields, including those in Rumaila and Kirkuk, and two undeveloped gas fields.

Iraq possesses the world’s third-largest proven crude oil reserves of 115 billion barrels and the six oil fields account for roughly one-third.

Iraq plans to boost crude oil production from 2.4 million barrels per day in 2008 to 4 million barrels in 2013 by introducing foreign capital and technology through the auction in order to secure funds to reconstruct the country.

Besides BP and CNPC, the companies selected to participate in the auction include Exxon Mobil Corp. of the United States as well as Japan’s Nippon Oil Corp., Japan Petroleum Exploration Co., Inpex Corp. and Mitsubishi Corp.

The auction was initially slated for Monday and Tuesday but was delayed because of a heavy sandstorm.

Analysts warn there are risks associated with the contracts such as the poor security situation and inadequate legal system in the country, as well as domestic resistance to the opening of oil and gas fields to foreign companies.

Iraq plans to auction contracts for 11 untapped oil fields at the end of this year.

(Rigzone)