ONGC [Get Quote] Videsh, the overseas investment arm of Oil and Natural Gas Corporation, is likely to bid for the eight oil and gas blocks that are being auctioned by Iraq, the country with the world's second largest proven oil reserves.

OVL, along with global oil majors such as Royal Dutch Shell, ExxonMobil, Chevron, ConocoPhillips, British Petroleum, Total and China National Petroleum Corporation, is one of the 35 companies short-listed by the Iraqi government for the auction, which includes six oil-producing blocks with recoverable reserves of 40 billion barrels of oil, making it the largest such auction in the world.

The bidding is likely to take place in the next few months and the blocks may be offered by June next year.

Iraq's oil minister Hussein al-Shahristani met officials of 35 short-listed companies in London on Monday. The government is expected to kick off the bidding process by giving companies access to data for the blocks on offer on Tuesday.

"Our team is in London meeting the Iraq officials. Once our team is back we will take a call on which blocks to bid for," said an official with OVL.

The auction of the oil and gas blocks in Iraq has revived the debate over whether the real intention of the US invasion of Iraq in 2003 was to secure the huge oil riches in the West Asian country rather than to flush out Saddam Hussein who allegedly sat on stockpiles of weapons of mass destruction (which were never found).

Iraq wants to ramp up output by 500,000 barrels per day in the next couple of years from the current average production of 2.5 million barrels per day, about equal to the amount being pumped before the March 2003 invasion.

Exports of 2.11 million barrels per day currently form the bulk of the country's revenues, and Iraq is keen to raise capacity over the next five years to 4.5 million barrels per day.

There are also security risks associated with operations in Iraq.

"Companies can operate when the situation is conducive. The security situation has improved in Iraq," said the OVL official. "Obviously Iraq is exciting," he added.

Analysts said companies would be keen to enter Iraq in spite of the risks involved. "If there is oil available companies will go. They would not want to lose out in the race for oil," a Delhi-based analyst said.

Oil prices have fallen over 45 per cent to around $80 per barrel from their peak of $147 per barrel on July 11 as demand slumps on a back of a financial crisis across the world. 

Prices are now almost equal to what they were a year ago.