Iraq plays too hard on oil auctions

After an embarassing license round in which BP was the only major to buy in and 7 of 8 oil and gas fields remained idle, it's becoming clear that Iraq will need to be more accommodating with its terms to entice Western oil majors to play:

Iraq's hopes for an oil-revenue fueled postwar recovery suffered a sharp blow Tuesday as the foreign oil companies it counted on to help develop its vast reserves greeted the country's first oil auction in over 30 years with grumbles and just one deal.

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Under the 20-year service contracts on offer, the companies would be paid a per barrel fee for any crude they produce in excess of a minimum production target. But the price requested by all the companies was at least twice as high — and in a couple of cases almost 10 times higher - than what the oil ministry was willing to pay.

Two oil executives from different companies at the auction complained that Iraq was offering too little money given the prevailing security risks and political uncertainty. They also complained that they were not given enough time to revise their bids — sometimes as little as 15 to 30 minutes. Both spoke on condition of anonymity because of the sensitivity of the issue.