Foreign energy firms have agreed to Iraq's conditions for investment in two major oilfields in the south of the country, Baghdad announced on Tuesday as it prepares to dramatically ramp up oil output.

Oil Minister Hussein al-Shahristani told a news conference that the aim is for crude production to be increased to between 10 and 12 million barrels per day within six years -- up from the current level of around 2.5 million bpd.

Exxon, Shell Win Iraq’s West Qurna Oilfield Contract (Update3)
By Robert Tuttle

Nov. 5 (Bloomberg) -- Iraq awarded a contract to develop the West Qurna oilfield to Exxon Mobil Corp. and Royal Dutch Shell Plc, a month before the country holds its second licensing round for oilfield contracts since the 2003 U.S. invasion.

The initial agreement, scheduled to be signed today, will be submitted to the Iraqi government for approval as early as next week, Asim Jihad, an Oil Ministry spokesman, said by telephone. The companies will be paid a fee of $1.90 a barrel for the oil they produce, he said, the maximum set by the government in a June licensing round. Exxon spokesman Patrick McGinn confirmed the agreement in an e-mailed statement today.

Earlier this week Iraq signed a contract with BP Plc and China National Petroleum Corp. to triple output at the Rumaila field to 2.85 million barrels a day. An Eni SpA-led group said in October it was awarded a license to develop the Zubair field.

“With these very encouraging examples, there will be a lot of interest in the second licensing round” in December, Samuel Ciszuk, an analyst at IHS Global Insight, said in a telephone interview.

Iraq, holder of the world’s third-largest oil reserves, aims to increase crude production to 6 million barrels a day by 2015. The country produced 2.45 million barrels a day last month, according to Bloomberg estimates.

In addition to Exxon and Shell, Iraq was in discussions with Russia’s OAO Lukoil, Total SA of France and CNPC for West Qurna, Abdul Mahdy al-Ameedi, deputy director general of Iraq’s Petroleum Contracts and Licensing Directorate, said last month.

Lukoil’s Loss

“It will be a big loss for Lukoil,” which did work on West Qurna when Saddam Hussein ruled Iraq, Ciszuck said. “They have really been eyeing this field.”