BP-led group wins Iraq oil bid

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A BP-led group has won a deal to develop Iraq's biggest oil field, but only on condition that it slashes what it earns from crude found in the area.

Iraq's Oil Minister Hussein al-Shahristani speaks at a news conference after a bidding round in Baghdad, June 30, 2009.REUTERS/Mohammed Ameen

Baghdad's tough terms put off other investors in the country's first major energy auction since the U.S.-led invasion in 2003.

The first field on offer was the Rumaila oil field with 17.8 billion barrels in crude reserves.

The BP-led group, which includes the Chinese National Petroleum Corporation, requested 3 dollars 99 cents per barrel for the field.

But it had to settle for just half of that. Other companies balked at the price and Iraq failed to strike deals on the remaining five oil fields and two gas fields.

Under the 20-year service contracts on offer, companies will be paid a per-barrel fee for any crude they produce in excess of a minimum production target.