Does this surprise anyone?

Foreign oil firms reject Iraq terms

Iraq's long-awaited licensing round to develop some of its massive oil reserves has run into trouble as international oil and gas companies rejected all but one deal, demanding more money for their efforts than the government was willing to pay.

Following Tuesday's initial bids, of the six oil and two gas fields on offer, Iraq had only struck a deal with a BP-led consortium for Rumaila, the largest oil field available.

Bids on the others came in far above the maximum fee the government was willing to pay for every extra barrel of oil produced.

But as the auction closed, Iraq's oil ministry said it had received seven revised bids from oil companies, not made public, which have been sent to the cabinet for consideration.

The process, which had been televised earlier, coincided with Iraq assuming formal control over its cities, a step towards ending the United States' combat role in the country.

A total of 32 firms, including US and European giants ExxonMobil and Shell and companies from China, India and other Asian states, have been chasing the opportunity to get 20-year service contracts to develop Iraq's resources.

The government was hoping the high-profile licensing round would help bring in foreign expertise to the country's energy industry, which is looking to boost output of a resource that provides 90 per cent of the government's revenues.

Some analysts have said the companies may have been unwilling to commit to major ventures, opting to wait and see how the security situation develops after the US pullout from urban areas.