The move on Monday to invite bids for the development of Iraq's largest producing fields should mark the return of the oil majors whose cash and expertise Iraq needs to restore infrastructure hard- hit by sanctions and war.

Iraq hopes that by offering development contracts to big foreign players, it can increase oil production by about 60 per cent, or approximately 1.5 million barrels per day (bpd).

This would swell Iraqi oil revenue and potentially ease tight petroleum markets where prices have doubled in the past year.

The invitation is a step towards giving Western firms a significant role in Iraq's oil industry, which the Baathist government nationalised in 1972.

But any awards to US and British firms could also anger opponents of the 2003 invasion, who have called it a thinly veiled oil grab.

US and British officials have always denied that.

And Iraqi Oil Minister Hussain Al-Shahristani told a news conference on Monday: 'With its massive proven reserves, Iraq should not stay at its current level of production. Iraq should be the second- or third- largest oil-producing country.'

The Oil Ministry says six fields are open for long-term development contracts and 41 foreign firms are qualified to bid.

Mr Shahristani said he hoped contracts could be signed next June and that by 2013, Iraq would have raised output from its the current 2.5 million bpd to 4.5 million bpd.

He said any firm that wanted to bid for contracts must open an office in Baghdad.

Few foreign companies have any presence in Iraq because of the security situation.

But Mr Julian Lee, a senior energy analyst at London's Centre for Global Energy Studies, said Iraq was a bit like Russia in the early to mid-1990s.

'No matter how risky you think it is, as an individual company you can't afford to be the only major international player that isn't interested.'

Iraq's proven oil reserves - at 115 billion barrels - are the world's largest after Saudi Arabia and Iran.

Deputy Prime Minister Barham Salih said in April that as yet unproven reserves could bring the total to as much as 350 billion barrels, far more than even Saudi Arabia.

Many Iraqis still bear a grudge after British, American and French oil companies controlled their oil industry for half a century through the Iraq Petroleum Co.

It was an era when Western majors working in the Middle East used oil output and prices as an economic and political tool, analysts said.

From the time it struck oil at the huge Kirkuk field in 1927 until nationalism forced it out in 1972, IPC - made up of BP, Exxon, Mobil, Shell, CFP (Total) and Partex - ruled the roost.

That did not go well with Baghdad, which resented IPC's control.

And along with the ongoing instability in the war-torn country, such attitudes could form a major obstacle in the country's new bid to achieve its potential as an oil producer.

REUTERS, WASHINGTON POST