Majnoon, which is Iraq's fourth-largest oil field, has estimated potential reserves of 12 billion barrels.

In the late 1990s, Elf, now part of Total, had negotiated a contract with the Saddam Hussein regime to operate Majnoon. Now, media reports say that both Total and Chevron have met with Iraqi officials to discuss a services agreement to develop the field.

The two sides hope that by securing a deal on Majnoon, which is less lucrative than a production-sharing agreement that lets companies discover and sell the oil, they will obtain a vital foothold for other deals.

Iraq has an estimated 110 billion barrels of oil. With more than half still to be developed, this offers a lucrative opportunity to Western companies desperate for new reserves. So far, companies such as Total, BP, Shell and Exxon have limited themselves to helping the Iraqi Oil Ministry to train junior staff and pull together data recorded under Saddam.

China's oil giants asked to play fair with smaller rivals
The Chinese government has asked China's two biggest oil refiners to stop limiting sales to independent resellers amid claims that energy giants are stockpiling supplies to boost their own profits.

The National Development and Reform Commission also ordered PetroChina and China Petroleum and Chemical Corp. to leave retailers a minimum state-guided gross profit margin.

According to Chinese media reports, the move came after industry executives said PetroChina and Sinopec had ceased supplying to independent distributors since late June to boost supply for their own gas stations amid surging summer demand for motor fuel. Oil giants denied the claim.

The oil majors were also accused of raising wholesale prices to near state-stipulated retail prices, making it unprofitable for independent resellers to trade.

U.S. to rebuild strategic oil reserve
The U.S. Energy Department, which seeks to replace reserves sold after hurricanes Katrina and Rita, said it may buy as many as 12 million barrels of crude oil for the nation's Strategic Petroleum Reserve this fall, Samuel Bodman, energy secretary, said Wednesday.

In May, the Energy Department canceled plans to purchase 3 million barrels after it got no suitable offers from the industry. It raised about $584 million from the 2005 sales, which came after the hurricanes cut supplies to refineries along the Gulf of Mexico.

"We do have funds that are available for the repurchase of an amount, I think it was some 12 million barrels, that we sold," Bodman told reporters Wednesday in a conference call, held to promote the department's energy-efficiency efforts.

The Strategic Petroleum Reserve, which has a capacity of 727 million barrels of oil, stood at 690 million barrels. The Bush administration has the authority, but not the funding from Congress, to raise the reserve's capacity to 1 billion barrels.

Closing oil prices, Aug. 10, 3 p.m. London
Brent crude oil: $69.93
West Texas Intermediate crude oil: $71.01

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