"The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years," Fayad al-Nema, director of the state-owned South Oil Co., which produced around two-thirds of Iraq's oil from the southern oil fields, told The Independent newspaper of London. "They squander Iraq's oil revenues."

Many lawmakers in Parliament have threatened to revoke the contracts, but the government of Prime Minister Nouri al-Maliki, desperate for outside investment to refurbish Iraq's long-neglected oil industry, insists that it does not need parliamentary approval.

Oil Minister Hussain al-Shahristani is scheduled to announce the winners selected from 120 candidates on June 29-30 to develop the world's third-largest oil reserves. The government is expected to ratify the contracts by the end of August, and the companies would have to start work by November or risk having the contracts rescinded.

The winners, which could include BP, Shell, Total and Exxon Mobil, will get production contracts for six of Iraq's main oil fields over 20-25 years.

The contracts will reopen Iraq to foreign oil companies for the first time since they were expelled in 1972 when Arab states nationalized their oil industries, which had for decades been controlled by the world's oil giants.

There's a lot riding on what happens in Iraq. Big Oil has for some time been pressing to return to the Arab world, and Iraq is their big chance.

Saudi Arabia, Iran, Kuwait and the United Arab Emirates still refuse to allow major oil companies to get their feet back in the door on the production side, although the Saudis did allow foreign companies to buy stakes in the natural gas sector a few years ago.

But they too need tens of billions of dollars in investment for their energy industries, and what happens in Iraq could decide whether wider foreign oil company involvement in the region will come about.

Al-Maliki's government, which urgently needs to restore an oil industry battered by decades of war and U.N. economic sanctions, insists that it is not giving away Iraq's greatest asset.

But critics claim that the government has been forced to relinquish control of the industry to Big Oil under pressure from the United States, which, they say, only invaded Iraq in 2003 to get its hands on Iraq's oil riches. The government insists it has not ceded control to lure the companies back.

Shahristani admits that he needs at least $50 billion over the next five or six years to reboot the fields and push production up from the current level of 2.4 million barrels a day. That's way out of the government's reach. The contracts reportedly involve up-front guarantees of soft loans totaling $2.62 billion.

The fall in oil prices in recent months, from the high of nearly $150 per barrel in the boom years of 2005-08 to the current level of around $70, left the government little choice but to pander to the foreign companies, the critics allege.

There is little doubt that the insurgency-ravaged economy is in dire straits, worsened by the global recession, and that the government urgently needs to boost oil production to pay its bills.

But the companies say they're ready to return even if the Iraqis have failed to enact a hydrocarbons law, seen as an indicator of political stability, which is looking rather questionable as U.S. forces are being withdrawn.

According to oil industry sources, the contracts are not particularly favorable to the foreign companies. But the international companies do not want to pass up the chance of getting back into Iraq.

The country has known oil reserves of around 115 billion barrels, the third largest after Saudi Arabia and Iran. But many fields have never been fully explored, and some industry experts believe they have double that total, far outstripping Saudi Arabia.

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