Iraq oil deal auction a 'success'; sees huge output

Iraq, emerging from the shadow of war, expects to boost its oil output to rival the level of top producer Saudi Arabia, after awarding some of its most attractive oil fields to global oil companies this week.

By the end on Saturday of a two-day bidding round for 10 oil contracts — the second auction since the 2003 US invasion —  Iraq had received pledges from oil firms to boost its output by 4.765 million barrels per day, almost double its current output.

If all deals from a first auction in June, the second this weekend and others being negotiated are added to national production, Iraq will have a capacity of 12 million barrels per day, overtaking Russia and challenging Saudi Arabia's 12.5 million bpd, oil minister Hussain al-Shahristani said.

"This second round marked a major success for the Iraqi government and the oil ministry," government spokesman Ali al-Dabbagh said.

Some 30 international oil companies braved the threat of violence and attacks to come to Iraq, putting aside security concerns just days after car bombs killed 112 people in Baghdad.

Oil majors from the United States appeared conspicuously uninterested in the fields on offer in the second round, confounding expectations that they might end up with the lion's share of Iraq's oil sector as a result of the US-led war.

Security may still be an issue. The series of car bombs on Tuesday was the third major assault on government buildings in Baghdad in four months and a bloody reminder of the fragile security as Iraq heads into a general election in March.

Thousands of Iraqi soldiers and police were deployed in the streets of the capital to protect the auction, and army helicopters buzzed overhead. Oil executives travelled around town in convoys of armoured SUVs with armed guards.