A consortium led by BP and including China's CNPC on Tuesday accepted a contract to develop Iraq's biggest oilfield, the 17-billion barrel Rumaila field in the south, Iraq's oil minister said.

The original winner of the bidding for the field, an Exxon Mobil-led alliance, had rejected the Iraqi Oil Ministry's maximum proposed per barrel fee for the contract, giving the BP group an opening to take it on.

The BP/CNPC alliance had to accept a fee of $2 for every  barrel of additional oil produced, compared with a fee of $3.99 included in their initial offer.

"We asked each of the companies to accept and BP and CNPC accepted the ministry's figure and for that reason their bid is accepted," said Oil Minister Hussain al-Shahristani.

Rumaila is the workhorse of Iraq's oil sector, with a current capacity of 1.1 million barrels per day out of Iraq's total national output of 2.4 million barrels per day.

It was one of six already producing oilfields and two undeveloped gas fields offered up on Tuesday in Iraq's first auction of major oil contracts since the 2003 US-led invasion.

The BP offer included a proposal to raise Rumaila's production to what appeared to be a very ambitious target of 2.85 million barrels per day. The government had set its  production target at 1.75 million barrels per day.-Reuters