Iraq's oilfield auction was an even tougher race than expected, allowing Baghdad to secure the services of some of the world's biggest energy firms at a knock-down price.

Oil firms even undercut the fee Baghdad was willing to pay, in sharp contrast to the preceding bidding round in June, when only one deal was awarded after the winning consortium cut its fee in half to match Iraq's terms.

Baghdad has leveraged the lure of its massive reserves, aware that there may never be another chance like this for big energy firms to gain access to Middle East oil.

"Iraq is one of the most hard fought oil plays in the world," said Raad Alkadiri, head of global risk at Washington-based consultancy PFC Energy.

"From an Iraqi standpoint this is a significant achievement.

The government has managed to get some of the biggest oil firms in the world to develop some of its biggest fields at a very low remuneration fee. This would have to be regarded as a success in contrast to the first bid round."

The winners of the two fields auctioned on Friday, consortiums led by Royal Dutch Shell and China's CNPC, would make smaller profits than the BP-led consortium that won a contract in the first round in June, according to statements by Iraqi Oil Minister Hussain al-Shahristani on Friday.

The Shell and CNPC consortia would make around 68 cents per barrel in profit on their deals after tax and payments to the state owned oil firm, he said in a TV interview. Earlier, he said BP would make 97 cents a barrel.

Shell and Malaysia's Petronas won a contract to develop the supergiant Majnoon oilfield on Friday with a bidding fee of $1.39 a barrel.

CNPC and partners Petronas and France's Total won a deal on the Halfaya field for just a cent more, at $1.40 a barrel.

The fees were 60-61 cents below the only deal awarded in the first round to BP and partner CNPC at $2 a barrel.

"The surprise for us is in terms of the remuneration fee," said Alex Munton, analyst at consultancy Wood Mackenzie. "The profits will be marginal to say the least."

Non-economic factors such as securing access to reserves and strategic positioning in the region would have played a part in the motivation for such aggressive bidding, Munton said.

Clarification on contract terms since the first bidding round in June, when most oil companies rejected what Baghdad was willing to pay, had allowed for more competitive bidding, said senior Shell executive Mounir Bouaziz.

Bidding for the remaining five fields on day two of the auction was likely to be equally or more competitive.

The last supergiant oilfield on offer in the auction would be West Qurna Phase Two, the first field on the block on Saturday.

Firms that are still empty-handed would have to bid hard to ensure they came away with a deal.

"You'd have to expect it to be equally competitive for West Qurna," Munton said. –Reuters