In Televised Auction of Oil Contracts, Iraq Plays Hardball

The Iraqi oil industry has been nationalized since 1972, but today the country is awarding the first contracts in decades to private petroleum companies—live on television. So far a joint bid by British Petroleum and a Chinese firm has won the first contract, for a 17 billion-barrel field in Iraq's southeast. As the Wall Street Journal reports, oil companies were taken aback by the government's tough pricing: the BP consortium won by halving the fee it wanted to assess the oil ministry.

Iraq has the world's third-largest known oil reserves, and its televised auction has introduced a new level of transparency into the lucrative contract battles. The oil ministry has been offering maximum payments far lower than what the petroleum companies want; ExxonMobil, for one, refused to accept the $2-per-barrel price that BP agreed to. "This is a bit crazy that their prices are so different than ours," said one oil exec. "We didn't think they would be so tough."
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