Iraq Approves BP Oil Deal, Rejects Other Bids

Iraq's government approved a deal in which a BP-led group will develop its Rumaila oilfield, but rejected parallel bids from other companies for further fields because the firms wanted fees that were too high, a spokesman said on Wednesday.

"The cabinet approved the bid submitted by the consortium led by British Petroleum to develop Rumaila ... It will boost output from current levels of 950,000 barrels per day (bpd) to 2.85 million bpd in return for $2 for each additional barrel produced," government spokesman Ali al-Dabbagh told Reuters.

"The cabinet rejected the other bids offered by companies because they did not lower the remuneration fee," he said.

Iraq Asks Oil Firms to Resubmits Bids for Fields

Iraq auctioned off eight giant oil and gas fields on Tuesday in its first major tender since the 2003 invasion, but there appeared to be a big gulf between what Iraq was willing to pay and firms willing to accept.

Iraq's oil minister asked international oil firms bidding for oil contracts to reconsider their proposals for fields the Oil Ministry had yet to strike deals on.

Of eight giant oil and gas fields on offer, Iraq had only struck a deal with a BP-led group for the largest, while offers on the others came in far above the maximum fee the government was willing to pay for every extra barrel of oil produced.

Oil Minister Hussain al-Shahristani set a deadline of 4 pm London time for oil executives gathered in Baghdad to resubmit bids in Iraq's first auction of major oil and gas contracts since the 2003 U.S.-led invasion.

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