Security still issue for Iraqi oil

LONDON, Nov. 4 (UPI) -- Investors could shy away from a December auction for the East Baghdad oil field that lies under the streets of Baghdad on security concerns, analysts say.

Iraq holds its second round of bidding for oil and gas fields Dec. 11. On the auction block is the East Baghdad oil field that holds an estimated 8.1 billion barrels of oil.

Several investors have eyed the East Baghdad field as one of the most lucrative and underdeveloped fields in the country.

Samuel Ciszuk, a Middle East oil analyst at IHS Global Insight, tells the Times of London, however, that the proximity to Baghdad and lingering security concerns may keep some investors away.

"The location is more unstable, which means that the security issue has definitely tempered appetite," he said. "It's less attractive than some of the bigger fields further south."

The first round of Iraqi auctions in June brought little interest as investors were reluctant to meet the government's terms amid an uncertain threat environment.

Nevertheless, British giant BP and the China National Petroleum Co. signed an agreement Tuesday to develop the Rumaila field near the Iraqi border with Kuwait.