ANALYSIS - Bewildered, big oil wants fruitful next Iraq round

By Simon Webb

DUBAI (Reuters) - Deal-makers from the world's biggest energy firms will demand more from Iraq's second oil deal bid round since the U.S.-led invasion after many walked away bewildered and empty handed from the first round last month.

Iraq is offering ten oil and gas fields at auction in late November, another chance for international energy companies to compete for access to the world's third-largest oil reserves.

Baghdad awarded only one of eight fields auctioned in the first round, offering such a low return on investment that most oil firms left the table despite having spent hundreds of millions of dollars in the pursuit of Iraq's vast oil wealth.

BP and China's CNPC won the only and biggest prize, a deal to work on one of the world's largest producing oilfields, Rumaila.

"We'll need to see better margins, it's as simple as that," said an executive at a major western oil company when asked what it would take for big oil to sign deals in the second round.

Executives were still struggling to understand the gulf that emerged at the auction between the return on investment they expected and the maximum Baghdad was prepared to pay.

After years of talks, to realise only on the day of the auction that the sides were so far apart on something as basic as payment, frustrated many involved.

Oil firms have put a lot of money into courting Iraq since 2003: between them over half a billion dollars on training Iraqi officials, negotiating quixotic contracts, technical studies and preparing bids and more, a senior executive estimated.