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."