British-Chinese consortium signs Iraq oil agreement

Under the terms of the Rumaila deal, BP will hold 38 percent stake in the venture to CNPC's 37 percent. The rest is held by Iraq's State Oil Marketing Organization, SOMO.

With Rumaila the only success story of the June auction, Iraqi oil officials revisited some of the bids submitted by other companies. The change of heart led to four consortiums accepting the country's terms.

On Monday, a consortium led by Italy's Eni SpA signed an initial agreement to develop the prized 4.1 billion barrel Zubair oil field, which lies near Rumaila. The consortium, which includes the U.S.'s Occidental Petroleum Corp. and South Korea's KOGAS, aim to boost output to 1.1 million barrels per day within seven years, up from the current 200,000 barrels per day.

Three other consortiums are competing to develop the 8.6 billion barrel West Qurna Stage 1 in the south.

One is led by Russia's Lukoil and U.S. giant ConocoPhilips, another by Exxon Mobil and Royal Dutch Shell while the third is led by CNPC.

The winner will be announced in the next few days, al-Shahristani has said.

According to al-Shahristani, the combined project output from Rumaila, West Qurna Stage I and Zubair will exceed 6 million barrels a day in six to seven years, with the companies expected to invest a total of about $100 billion in the projects.

All three projects -- Rumaila, Zubair and West Qurna Stage 1 -- are "super giant projects with no match in size anywhere else in the world," Ciszuk said.

"There are still considerable risks and many question marks in Iraq," Ciszuk added, citing the absence of legislation governing natural resources and political uncertainty ahead of January's parliamentary elections.

However, Ciszuk said "companies agreeing to these deals are convinced it's a good time to go in now, since they won't invest too much until the balance of power (in Iraq) will be clearer."

Iraq is planning a second bidding round on Dec. 11-12. Forty-five international oil companies will compete for development right for 10 oil projects.

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