BP and China Win Iraq's Oil Deal

On Tuesday, the joint venture of British energy giant BP PLC and its Chinese counterpart China National Petroleum Corp (CNPC). won the deal to develop Iraq's biggest oil filed -- Rumaila. The auction, held by the Iraqi government on the deadline for American troops' withdrawal from all the Iraqi cities was meant to celebrate the democracy the country eventually gained after a long time civil war.

Several competitors dropped their offers after Oil Minister Hussein al-Shahristani said the winners would only be paid US$2 per barrel, less than tenth of the average bids.

“These oil companies want to make as much money as they can,” said the minister during a news conference following the auction. “But I sent them a message that there are people in Iraq who are protecting Iraq’s wealth.”

Under the 20-year contract, the joint venture of BP and CNPC will increase the production at Rumaila, which has been proved to have over 17 billion barrels in reserve, to 2.85 million barrels per day, at the average cost of US$ 3.99 a barrel, from the current 956,000 million by 2015.

Eight world's high-profile oil producers, including Royal Dutch Shell and ConocoPhillips, were competing to help Iraq develop its domestic energy resources, and over 30 companies were bidding for related technical services.

Iraq owns about nine percent of the world's oil reserves, but the infrastructures are aging.