Iraq, which produces about 2.4 million barrels of oil a day (2009), holds reserves of about 115bn barrels. In early 1973 Baghdad nationalized the industry and many of the world’s biggest oil companies including BP and Royal Dutch Shell were expelled from the county. Now in 2009, international oil companies are preparing to go back into Iraq, in spite of Baghdad’s failure to pass a hydrocarbon law and continuing concerns over security. The service contracts, which the companies are bidding for, are divided into six groups of fields, and include up front guarantees of soft loans totaling $2.6bn.For five years, following the US invasion of Iraq, oil executives had been insisting on better security and the passage of a hydrocarbon law – seen as crucial by the previous US administration as an indicator of political stability – before they would be willing to invest billions of dollars. Now the companies say they are prepared to return to Iraq even though the country’s oil law remains bogged down by political discord and its fragile peace, mostly because international oil companies are short of reserves and opportunities and Iraqi reserves are relatively easy and inexpensive to tap. Only Saudi Arabia and Iran hold more oil, but both are off limits to international companies, which have had to move into increasingly remote or expensive areas such as the Arctic and Canada’s oil sands. The absence of a hydrocarbon law can be dealt with through contracts. Although Iraq may be at the bottom of any scale ranking investment climate – even for hardened oil companies – it is at the top of any scale ranking the attractiveness of its oil reserves. For oil companies, the drop in the oil price may have drastically reduced available cash but not so much as to force them to forgo the biggest investment opportunity since the fall of communism lifted the barriers to Russia and the Caspian. In the Iraqi oil auction of December 2009, one of the biggest auctions held anywhere in the 150-year history of the oil industry, the oil companies were awarded service contracts lasting 20 years for seven of the 10 oil fields on offer and the oil will remain the property of the Iraqi state, and the foreign companies will pump it for a fixed price per barrel. Iraq heavily weighted the contracts in its own favor, demanding a low per-barrel price of between $1.15 – $2 a barrel they produce (namely 2% of a $73 barrel) and signing bonuses of up to $150 million. Iraq’s has 115 billion barrels of known oil reserves.