Abu Dhabi's Mubadala Oil and Gas and Dragon Oil of Dubai are among 47 companies set to compete for 12 blocks in Iraq's first auction of undeveloped oilfields since United States troops left the country in December.
Many countries offer such exploration contracts on a production-sharing basis, which motivates companies to make big finds and allows them to book the reserves.
But Baghdad, which says such agreements violate the 2005 constitution, is offering service contracts that pay a set fee per barrel - which some oil executives say is not enough of an inducement.
Mubadala Development is a strategic investment company owned by the Abu Dhabi Government.
"The companies are not that keen on the terms," said Robin Mills, the head of consulting at Manaar Energy in Dubai. "You'll probably see more of the Asian oil companies who are bidding just to get a foot in the door, or you'll see people bidding just to win something and try to renegotiate later on."
Baghdad has been trying to cooperate with potential bidders to loosen the terms in the run-up to the auction, which has been delayed four times since last year.
It will award the blocks, which the Iraqi oil ministry says contain at least 10 billion barrels in reserves, based on the amount companies seek for each barrel they produce.
The ministry has also inserted a clause into the latest contracts saying it can cancel the agreement if the foreign partner signs an oil deal with the government in Iraqi Kurdistan or with another regional government, a move sparked by ExxonMobil's entrance into Iraqi Kurdistan last autumn. "They're trying to slide the door closed after the horses bolted," said Mr Mills.
ExxonMobil's agreement covering six blocks was the first by a supermajor in the semi-autonomous Kurdish region, where smaller independent exploration companies dominated. Until then, the supermajors had steered clear of Kurdistan because of Baghdad's unofficial blacklisting policy.
Baghdad tried to retaliate by threatening to take away ExxonMobil's contract in the massive West Qurna field, but it has had little success except by blacklisting the American company from today's bidding round.
Instead, more companies, including France's Total, have become emboldened to say they are seeking deals in Kurdistan.
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