In June many of the world's biggest energy companies walked away from bidding on potentially rich oil fields in Iraq. While they liked the billions of barrels of reserves that were on offer, ENI (E), ExxonMobil (XOM), Royal Dutch Shell (RDSa), and others balked at the tough terms the Iraqis were proposing.

Today they're coming back—and getting roughly the same deal that was on the table during the summer. On Nov. 2, ENI initialed a contract to boost production in the Zubair field near Basra, which it estimates has 6 billion barrels of reserves. Shell, Exxon, and ConocoPhillips (COP) also are in talks that could help boost Iraq's oil production to more than 6 million barrels per day—behind only Saudi Arabia in OPEC. "This is the window in which if anything can happen it will happen," says Alex Munton, an Iraq specialist at Edinburgh-based energy consultants Wood Mackenzie.

The big oil companies are reconsidering Iraq because they realize this may be among their last opportunities to get large volumes of crude. Britain's BP (BP), for instance, typically turns up its nose at anything below roughly 700 million barrels of reserves; Rumaila, about 30 miles west of Basra, may have 20 billion barrels of recoverable oil, BP estimates. Another field in the same class is West Qurna, located north of Basra, where a group including Exxon Mobil and Shell is competing against a partnership of ConocoPhillips and Russia's Lukoil (LKOH.RTS) for production rights.

Majnoun, which the Iraqis will offer in December, could have 12 billion barrels. And Kirkuk, where Shell is hoping to get a contract, has at least 8.5 billion barrels. "It is fair to say that there are many people negotiating now who would not have taken $2 [in profit per incremental barrel] before," Shell Chief Financial Officer Simon Henry said during the company's Oct. 29 earnings conference call with reporters.

A Threat to OPEC?

The change of heart among oil majors could increase tensions in OPEC, which had assumed Iraqi production would remain low until the world regained its thirst for crude. As Iraqi output starts to rise, the Saudis and other big producers are likely to try to persuade Iraq—which belongs to OPEC but is exempt from its quotas—to toe the line. The Iraqis, though, may want to pump the maximum, arguing that other cartel members who have profited for years from Iraq's market absence should bear any future production cuts. "This is an issue that is going to come to the forefront as deals progress," says David Kirsch, an analyst with Washington consultancy PFC Energy.

ENI's deal is similar to the one BP agreed to after the June auction. ENI and its partners, Occidental Petroleum (OXY) and Korea Gas, plan to increase output at Zubair from the current level of 190,000 barrels per day to 1.125 million within seven years. The companies will recover all costs and receive $2 in profit for each barrel above today's production level. In June they had insisted on $4.80 per incremental barrel. But after BP agreed to $2 per incremental barrel for tripling production at Rumaila—signing a deal on Nov. 3 in Baghdad—the benchmark price had been set. ENI says clarifications from Iraq on tax-related issues were critical in the decision to accept a lower price. "We got a contract that guarantees us the right return," says Claudio Descalzi, ENI's exploration and production chief.

Of course, big obstacles remain. Security will always be a worry. If Prime Minister Nouri al-Maliki, who has promoted the oil deals, is turned out in January elections, the investment climate could sour. And projects that do go through could be hampered by a shortage of skilled workers and infrastructure woes such as a lack of oil terminals and pipeline capacity to get Iraqi crude to foreign markets.

Click here to read more