Iraq expects more from second energy auction

By Missy Ryan

BAGHDAD (Reuters) - The Iraqi government is hoping that a second major auction of oil and gas fields later this year will help revive a struggling oil industry where a first auction this week fell short, a government spokesman said.

"We think that the first (bidding) round didn't achieve the full objectives of the Ministry of Oil," government spokesman Ali al-Dabbagh told Reuters on Saturday.

"At the same time, it was a good achievement especially in Rumaila oilfield ... With that level of production, we have compensated for the less(er) achievement of the first round. Generally we are happy with what we achieved," he said.

The auction last Tuesday, Iraq's first major competitive energy tender in decades and one of the biggest in history, stunned industry insiders when a wide gap between the government and oil majors over payment terms resulted in the sale of just one of eight fields put on the block.

Oil Minister Hussain al-Shahristani brushed aside criticism it was a flop, saying the deal reached with a BP-led group for the country's largest explored oilfield, Rumaila, would on its own provide a bigger production boost than they had been hoping for from the first round.

While plans to quickly increase output from 2.4 million barrels per day were dealt a blow, the government's rejection of more pricy deals may play well among critics who oppose anything that could be seen as selling off Iraq's prized asset cheaply.

"The Iraqi government is careful not to waste oil wealth, but at the same time there is a balance between this point and Iraq's needs to develop the oil industry," Dabbagh said earlier in a meeting with reporters.

After the auction Iraq said it would move up the date for the second round of tenders, expected to be more lucrative because the 11 fields to be offered are still undeveloped and could double current production.