The additional oil which would represent an almost fivefold increase over current production will also generate, at current oil prices, annual revenues of $200 billion from exports and possibly higher if one assumes that oil prices will be higher by then, he told reporters after contracts were awarded in Iraq's second oil auction held Friday and Saturday.

These additional funds will be used to help in the post-war reconstruction of Iraq, he said. Oil revenue accounts for nearly all of the country's total earnings and the minister has come under attack in the past for the slow pace of national efforts to raise output capacity, which has remained stagnant and even declined as a result of decades of wars and sanctions.

Current sustainable output capacity is 2.5 million b/d, lower than the 2.8 million b/d average produced in the three months leading up to the US-led war of March 2003 when Iraq was still under crippling UN sanctions which barred foreign investment in its energy sector.

Shahristani said production from seven of the 10 oil fields awarded during this current second oil auction will amount to a total 4.765 million b/d. An additional 6.375 million b/d will be produced from just three fields --Rumaila, Zubaira and West Qurna 1--awarded during the first bidding round process, he said.

"If you put together the production of these ten fields from the first and second bidding rounds, it will be more than 11 million b/d. We add to this production from other Iraqi oil fields belonging to the oil ministry--and they are big fields--like Kirkuk, Bai Hassan and Bazergan--of one million b/d," he told a news conference after the latest awards were announced.

"Therefore Iraq's production capacity in the next six years will be 12 million b/d, among the highest in the world," Shahristani said.

A production capacity of 12 million b/d would put Iraq just behind OPEC kingpin Saudi Arabia, which has current output capacity of 12.5 million b/d.

MAJORS TO INVEST $100 BILLION

The foreign oil companies awarded contracts for the three first round fields will invest $70 billion, Shahristani said, adding he could not give an estimate for the new awarded contracts until the final investment figures are submitted by the winning consortia or companies.

Iraq's oil ministry Friday and Saturday awarded service contracts for some of its largest discovered but not yet developed oil fields to foreign multinationals at a two-day awards ceremony which saw a far higher success rate than the previous round, when only one out of six producing fields offered was awarded on June 30. Two more were awarded subsequently.

The first contract for the giant Rumaila oil field went to a consortium of BP and China's CNPC, which set the tone for the subsequent awards when they agreed to halve their remuneration and accept a per barrel service fee of $2/b to raise production from Rumaila to a plateau of 2.85 million b/d from just under 1 million currently.

Iraq later renegotiated with the highest first round bidders and awarded the West Qurna 1 field to a consortium of ExxonMobil and Shell and the Zubair field to a consortium led by Italy's Eni, again for lower remuneration than the companies had pitched previously.

Second round bidding, with service fees often coming in below the ministry's maximum, was evidence of keen interest in the acreage on offer by the more than 40 qualified international oil companies which sent their representatives to the Iraqi capital despite a resurgence of violence a day before the awards when a series of car bombs killed more than 100 people.

Shell and Petronas snagged one of the biggest prizes of the second round by winning the contract to develop the 12 billion Majnoon oil field followed closely by Lukoil, which ended a long wait for the West Qurna field by winning the rights to 12.9 billion barrel West Qurna 2 with partner Statoil of Norway.

Petronas of Malaysia scored a hat-trick on the second day with three more awards, one in partnership with Total and CNPC for the 4 billion barrel Halfaya field, and another for the 860 million Gharraf field in partnership with Japex. It was also part of a winning consortium led by Russian gas giant Gazprom for the Badra oil field along with Turkey's TPAO and Kogas of South Korea.

Sonangol, state-owned oil company of Angola, won the rights to develop the heavy oil fields of Najma and Qayara in northern Iraq with combined total reserves of 1.6 billion barrels.

CRUDE QUALITY TO CHANGE

Two other fields, East Baghdad and a cluster known as the Eastern Field were not awarded and received no bids.

Shahristani said he was aware that the additional crude, which will vary in quality from light to medium to very heavy, will pose challenges to Iraq's pipeline and export systems though there were plans to build new infrastructure.

Some analysts have questioned Iraq's ability to absorb the incremental crude given its restricted export capacity, a lack of storage and the need to repair and upgrade its pipeline system and build new export routes.

--Ben Lando, newsdesk@platts.com