Royal Dutch Shell and Petronas of Malaysia won the rights Friday to develop one of the world’s largest remaining untapped oil fields, as Iraq held its second auction of oil contracts since the U.S.-led invasion of the country in 2003.
The companies proposed that a fee that Iraq would pay them to develop the Majnoon oil field be set at $1.39 per barrel and they pledged to increase output from the field to 1.8 million barrels per day, more than twice what Iraq had expected.
“The fee is less than the Oil Ministry specified,” the Iraqi oil minister, Hussain al-Shahristani, said at the auction, which took place under heavy security in Baghdad.
The French oil major Total had joined with China National Petroleum Corp. to bid for the field, which it had sought to develop during Saddam Hussein’s rule. As some consolation, Total had a stake in a C.N.P.C.-led consortium that won the rights to the smaller Halfaya oil field.
Iraq is offering 10 oil fields over two days in a rare opportunity for oil companies, from Western majors to Chinese and Indian state-owned giants.
Despite the anticipation, no one bid for the 8.1-billion-barrel East Baghdad field, part of which is under the Sadr City slum in the Iraqi capital. Baghdad is still hit by periodic bombings and oil executives considered it unsafe to invest in that field.
Mr. Shahristani said the Iraqi Oil Ministry would develop the East Baghdad field on its own.
The deals have the potential to lift Iraqi oil output to levels that would rival those of the top oil producers, Saudi Arabia and Russia, and could rattle the geopolitical power balance in the Middle East.
Competition had been expected to be fierce as the auction included the last of Iraq’s giant fields, with the Majnoon field holding 12.6 billion barrels. They are among the last untapped fields of their size in the world.
Collectively, the fields on offer hold about as much oil as all that held by Libya, which is a member of the Organization of the Petroleum Exporting Countries.
Iraqi Army helicopters buzzed overhead while convoys of armored sport utility vehicles carrying oil executives hidden behind tinted windows raced through Baghdad to the auction.
Halfaya, with 4.1 billion barrels of reserves, was won by the consortium of C.N.P.C., Total and Petronas. They proposed a fee of $1.40 per barrel and a plateau production target of 535,000 barrels per day.
Also on the auction block were a cluster known as the Eastern Fields in Diyala Province and Qayara, a reservoir in the northern province of Nineveh, where Sunni insurgents are active and Kurdish-Arab disputes have led to tension.