BAGHDAD -- Iraq's hopes for an oil-revenue fueled postwar recovery suffered a sharp blow Tuesday as the foreign oil companies it counted on to help develop its vast reserves greeted the country's first oil auction in over 30 years with grumbles and just one deal.

Roughly a year in the making, the foreign licensing round was touted by Oil Minister Hussain al-Shahristani as a key step to boosting Iraq's oil output to 4 million barrels per day and raking in cash the government desperately needs after years of sanctions and the U.S.-led invasion in 2003 left its economy in shambles.

But the process has been criticized inside the country from the start, and the poor showing at the televised event could offer opponents of the embattled al-Shahristani even more ammunition.

It's the kind of political unrest that helped keep the companies at arm's length, despite a shot at 43 billion of the country's 115 billion barrels of crude reserves.

"With this outcome, the Iraqi government becomes the desperate one," said Samuel Ciszuk, Mideast energy analyst for London-based IHS Global Insight. "Al-Shahristani has been very focused on this round, and criticized for ignoring everything else, including the easy repairs that could have been done over the past couple of years."

The televised event came as U.S. troops completed their withdrawal from Iraqi cities, handing over security of urban areas to their Iraqi counterparts.

The development, hailed by Iraqis as a sovereignty milestone, likely served to only further raise questions among oil companies monitoring events around the country before committing to big projects.

From the first field offered, disputes over how much the companies would get for producing over a minimum output target cast a pall on the process.

Under the 20-year service contracts on offer, the companies would be paid a per barrel fee for any crude they produce in excess of a minimum production target. But the price requested by all the companies was at least twice as high -- and in a couple of cases almost 10 times higher-- than what the oil ministry was willing to pay.

Two oil executives from different companies at the auction complained that Iraq was offering too little money given the prevailing security risks and political uncertainty.

They also complained that they were not given enough time to revise their bids -- sometimes as little as 15 to 30 minutes.

Both spoke on condition of anonymity because of the sensitivity of the issue.

Chevron Corp., the second-largest U.S. oil company behind Exxon Mobil Corp., said it decided not to submit a bid in the opening round, but didn't rule out doing so in future auctions.

It said it opted out after a "careful evaluation of the opportunities against Chevron's standard investment criteria and our inventory of investment projects worldwide."

The first field on offer was the day's sole success story. But also underlined the government and the companies' widely differing expectations.

Two consortiums, headed by British giant BP and Exxon Mobil, submitted offers for the Rumaila oil field -- the largest prize on offer with 17.8 billion barrels in crude reserves.

The Exxon Mobil-led consortium, which included Malaysia's Petronas, requested $4.80 per barrel for production over the minimum, while BP wanted $3.99 per barrel. The ministry was willing to pay $2 per barrel.

BP agreed to match the ministry's price and won the contract for Rumaila.

Exxon Mobil, in a move mirrored by other companies throughout the day, refused to revise its bid.

"Our numbers were not far from reality, and proof of that is that BP accepted our price for Rumaila," al-Shahristani said after the auction. SUBHEAD: Executives say Iraq was offering too little, given the security risks and political uncertainty.

Originally published by SINAN SALAHEDDIN Associated Press.

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