FACTBOX-Iraq oil contracts for 2nd bid round

Oct 19 - Iraq plans to auction 10 of its untapped oilfields in December in its second bidding round since the U.S.-led invasion in March 2003.

The first round was in June, when only one of eight oil and gas fields on offer was awarded as most foreign oil firms rejected what they saw as tough contracts.

Since then, contract terms have been sweetened and clarified, and Iraq is close to sealing renegotiated deals for two of the fields that it failed to award in the first round.

The contracts for the second round are little different from the revised deals for the first. They are 20-year oil service contracts. The following details some of the differences between the first and second round contracts:

*Tax: In the first round, oil companies believed they would be taxed at 35 percent on all revenues. Iraq later said the tax would only apply to profit, and not to all revenues including those used to recover costs.

*Plateau production: In the second round, oil firms have 7 years to reach their target production rate and would need to maintain that target rate from 7-13 years. The duration of the target production rate would vary according to the different fields. In the first round, target or plateau output was to be reached in 6 years and maintained for 7.

*Bidding parameters: Parameters would be more equally weighted in the second round. The two parameters for bidding are the target output and the remuneration fee per barrel that oil firms want for the work. In the first round, the weighting was more toward the target output. The change is to prevent oil firms submitting unrealistic output targets, oil officials said. *One of the big differences between the bid rounds was that the fields on offer in the second round are undeveloped and mostly not producing. The fields on offer in the first round were some of Iraq's biggest producing fields. Companies bidding in the first round were concerned about the state of infrastructure at the fields, environmental damage and the state of reservoirs after years without proper maintenance. In the second round, oil company concerns included issues such as current use of land at fields, access to water, clearance of mines and other war hazards and the treatment of the local population.