China's three major oil companies are thinking of participating in Iraq's second auction of oil and gas fields later this year, in a move to get a better foothold in the country's oil industry.

China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec) may continue to bid in the second auction, as they "cannot neglect the rich oil and gas reserves in Iraq", said a source close to the situation.

Fu Chengyu, president of China National Offshore Oil Corp (CNOOC), said last Saturday that the company might take part in the second round of bidding, without elaborating.

"Domestic oil companies won't miss this unprecedented opportunity," said the source. "But they all realize that it requires painstaking negotiations to succeed."

"Just like in the first bidding round, they may choose to form consortia with foreign companies in the second round to reduce risks," he added, asking not to be named.

Iraq last Tuesday made its first auction of major oil contracts since the US-led invasion. China's three oil majors all took part in the bidding, but only CNPC, which teamed up with BP, won a contract to develop the Rumaila oilfield.

The CNPC-BP contract was also the only one to be awarded in the first auction, as there were some differences between the Iraqi government and oil majors over payment terms.

After the first auction, Iraq said it would move up the date for the second round of tenders, which is reported to be at the end of this year.

"Domestic companies can never find bigger opportunities in other places than in Iraq, which has the third largest proved oil reserves in the world," said Lin Boqiang, professor, Xiamen University.

"What can help them is that some Chinese companies have already had some experience working in the country," he said.

Last year, CNPC signed a service agreement to help Iraqi partners develop the Al-Ahdab oilfield, 180 km southeast of Baghdad.

CNPC will "use advanced technologies" to increase the oilfield's manufacturing capacity to 25,000 barrels per day within three years, and to 115,000 barrels per day within six years, the company has said.

(China Daily July 7, 2009)