A mixture of Iraq's freewheeling politics, security concerns and Baghdad's refusal to heed the financial demands of the international oil companies the country needs to rebuild and expand its all-important energy industry appear to have been behind the failure of the two-day auction.
Whether this setback in Iraq's grandiose plan to become one of the world's most powerful energy producers, at a time when there's a global gas glut, signals a serious reversal for Baghdad isn't clear.
But it seems that the continuing discovery of unconventional oil and gas, particularly in North America, are reshaping the economies and politics of the global energy industry.
The United States alone now has enough gas to last 100 years.
Major new strikes in East Africa and the potential for hefty production increases in China, now a key energy importer, have taken the shine off Iraq's potential.
"The geopolitical centrality of the Middle East will wane," the Financial Times observed.
"That is because the power and the relevance of its oil producers have peaked and are heading down," wrote Roger Altman, former U.S. deputy secretary of the Treasury.
"Whether Iraq is producing 1 million barrels of oil more or less is not going to mean much in 10 or 20 years."
When the auction closed Thursday, only three contracts had been awarded for 12 exploration blocks on offer, the poorest performance of any of the auctions since 2009.
Eight blocks received no bids because none of the 39 approved bidders, including Royal Dutch Shell, BP and Chevron of the United States, refused to accept Baghdad's terms.
This auction was different from earlier ones because it focused not on developing established fields but exploration in remote areas.
Arguably the key factor in the auction fizzling out was Baghdad's refusal to pay more than $5.38-$6.24 per barrel produced, far short of what companies wanted.
But they were undoubtedly put off by the uncertain security situation, with repeated bombing attacks and assassinations by al-Qaida and other minority Sunni groups, the threat of disruptions, particularly in the remote areas on offer.
Then there's the absence of a hydrocarbons law to regulate the energy industry on which Iraq's reconstruction and future prosperity depends.
A bill to determine revenue-sharing and other vital issues remains snarled in Iraq's fractious Parliament, with little sign it will became law anytime soon.
Another inhibiting factor, written into the Oil Ministry contracts for the first time, was a clause forbidding companies signing any deals with the semiautonomous Kurdish enclave in northern Iraq or any other sub-national authority in the country.
This stems from an ongoing dispute between the ministry and the U.S. oil giant Exxon Mobil, which signed a six-block deal with the Kurdistan Regional Government in October 2011 that incensed Baghdad, which insists it's the sole authority in energy affairs.
Shell and France's Total, which like Exxon Mobil have major development contracts in oil-rich southern Iraq with Baghdad, also have been reported to be mulling breakaway deals with the KRG.
The Kurds' three provinces sit on an estimated 45 billion barrels of oil and they offer greater rewards than Baghdad.
Exxon's ground-breaking deal with the KRG, the first between an international oil major and a regional authority in Iraq, was a massive boost to the Kurds' ambition of establishing an independent homeland.
But that signing also encouraged other regions, notably Sunni-dominated provinces in the west and central Iraq as well as Basra province in the south, controlled by Iraq's Shiite majority, to demand greater autonomy.
Two-thirds of Iraq's reserves of 143.1 billion barrels of oil lie in the Basra region, along with what analysts say are billions more barrels in untapped fields.
An important consequence of the auction's failure is that the key aim of expanding Iraq's natural gas production, a vital requirement if industry is to be rebuilt and expanded, has been upset.
Iraq suffers from a critical shortage of electricity, which is curbing foreign investment.
It desperately needs a huge increase on gas production to fuel power plants and that may not be forthcoming.