Royal Dutch Shell and Malaysia’s Petronas won the deal for Majnoon, one of the world’s largest untapped oilfields, on the first day of Iraq’s second oil contract auction since the 2003 US invasion, a heavily protected event.

French oil major Total, partnered with China’s CNPC and Petronas, won the smaller Halfaya oilfield.

But no successful bids were made for more dangerous fields, including East Baghdad, which lies in part under the capital’s Sadr City slum and would be difficult to protect from attack.

The world’s largest energy companies also steered clear of fields in northern areas where Arabs and Kurds are at odds and Sunni insurgents like al Qaeda are still on the prowl.

“The new Iraq — after all it has suffered from wars and misadventures that led to destruction and upheaval — ...is in grave need of developing its oil industry,” Prime Minister Nuri Al Maliki said as he opened the tender.

One of the choicest prizes, West Qurna Phase Two, with 12.9 billion barrels of reserves, will be offered on Saturday morning. Fierce competition was expected for the last of the supergiant fields on offer. Supergiants have reserves of 5 billion barrels or more.

Only two of five fields on offer on Friday were awarded.

But the projected boost in capacity, combined with other deals signed or in the pipeline, have put Iraq on track to quadruple production potential to 10 million barrels per day in six to seven years, Oil Minister Hussain al-Shahristani said.

That would match Russia and leave only Saudi Arabia ahead on 12.5 million bpd.

“Iraq will be at the forefront of producing and exporting countries,” he said.

Baghdad desperately needs the billions of dollars of revenue that more oil output would generate to rebuild after decades of war and sanctions and years of neglect and sabotage.

Shell Outbids Total

With 12.6 billion barrels of reserves, Majnoon in relatively stable southern Iraq is one of the largest untapped oilfields left on earth.

Shell and Petronas proposed a fee of $1.39 per barrel and pledged to increase output to 1.8 million bpd, more than double what Iraq had expected. They outbid Total, a favourite to take the field which it had sought to develop under ousted dictator Saddam Hussein.

Halfaya, with 4.1 billion barrels of reserves, was some consolation. CNPC, Total and Petronas won it with a fee of $1.40 per barrel and a plateau production target of 535,000 bpd.

In contrast to the first auction in June, when only one deal was awarded and most firms balked at stiff terms, the fee bid by companies this time was below what Iraq was willing to pay.

“In the first round, there was a big misunderstanding between what the ministry had intended and how the industry understood the contract, and you ended up with a big gap,” said Mounir Bouaziz, vice-president for Shell Gas & Power. “This time... they got extremely competitive offers.”

BP and CNPC won a deal in the first round to develop Iraq’s biggest oilfield, Rumaila. Since then, Iraq has initialled deals on two other huge fields, West Qurna Phase One and Zubair. Together, those three deals could add 4.5 million bpd to Iraqi crude production.