BAGHDAD -- Iraq's first major attempt to woo foreign oil companies to help resurrect its ailing oil fields appeared doomed Tuesday, as most companies balked at the financial terms the government offered.

During a day-long live auction for eight 20-year service contracts, the Iraqi oil ministry was able to nail down just one -- for the Rumaila field in southern Iraq. The ministry accepted a joint bid submitted by British Petroleum and the China National Petroleum Corp. to boost output there.

Iraq offered to reimburse the companies for costs and pay them a per-barrel fee for increases in production from the country's abundant but long neglected fields. But it did not offer a more attractive type of contract, which would have given the companies an ownership stake in the crude. It also demanded nearly $3 billion in "signing bonus" loans for the six oil fields, which are active but under-producing, and two largely undeveloped gas fields.

BP and China's national oil company submitted a joint bid agreeing to do the work at Rumaila for $2.85 per barrel. The ministry said it would pay a maximum of $2. In the end, the companies agreed to that price.

The other fields attracted no bids that came close to the government's price. The session at the al-Rasheed Hotel, near Baghdad's Green Zone, ended shortly before 5 p.m.

Iraq has the world's second-largest proven reserves of oil. The country has long been attractive to oil giants because drilling is relatively easy and cheap here and because other attractive markets have in recent years taken steps to nationalize their energy sectors.

The auction represented the first opportunity for major oil companies to return to Iraq since they were expelled in 1972 amid a regional move toward nationalization.

Many of the companies have already been informally advising Iraq's government on how to keep up production in existing fields. Iraq is currently producing about 2.4 million barrels a day, well below its peak output. Many of the fields have been damaged during fighting or by poor maintenance or poor techniques for boosting output.

Oil minister Hussain al-Shahristani has said that the goal of the current round of bidding was to raise the country's output to 4 million barrels a day. Oil industry executives say that Iraq could easily produce about 6 million barrels a day.

While eager to tap into Iraq's fields, oil executives were apprehensive about injecting themselves into a country with volatile politics and an active insurgency. Another disincentive is Iraq's failure to enact a hydrocarbons law.

But oil companies have signed service contracts elsewhere in the world and in the end price was a key issue whether the bidders were Exxon Mobil or China's CNOOC.

In the Kirkuk field in the north, for example, which was discovered in 1927, a consortium led by Royal Dutch Shell said it could raise current production of 390,000 barrels a day to about 800,000 barrels a day for a fee of $7.90 a barrel. Iraq's oil ministry wanted to pay only $2 a barrel in that field. The Chinese firms Sinopec and CNPC were part of that group.

A consortium led by Exxon Mobil said it could boost production in the West Qurna field alone to 2.35 million barrels a day for $4 a barrel. The Iraqi government only wanted to pay $1.90 a barrel there.

The biggest gap between bid and Iraqi oil ministry targets came from a Conoco Phillips-led consortium including two Chinese companies. The oil firms offered to develop the Bi Hassan field for a fee of $26.70 a barrel; Iraq's target was $4.

Other bids were closer to the Iraq government's target and oil industry sources said that the situation remained "fluid" and that further negotiations were possible.

By Ernesto Londoño, K.I. Ibrahim and Steven Mufson
Washington Post

Mufson reported from Washington.