July 4 (Bloomberg) -- China National Offshore Oil Corp., the nation’s third-biggest oil explorer, may continue to bid for oilfields in Iraq after the Gulf country awarded a contract to its bigger rival, China National Petroleum Corp.

“We may continue to participate in the second round,” China National Offshore President Fu Chengyu said today in Beijing. Iraq plans to award contracts for oil and gas field exploration and development in a second licensing round to be held before the end of the year, Abdul Mahdy al-Ameedi, deputy director general of the Petroleum Contracts Licensing Dept., said July 2.

Iraq gave the development contract for Rumaila, the largest oilfield in the Middle Eastern nation, to BP Plc and China National Petroleum, and failed to award most of the contracts offered in an auction on June 30. The government aims to boost oil output to 4 million barrels a day within the next five years, from about 2.4 million barrels.

The BP-led group beat a bid from Irving, Texas-based Exxon and Malaysia’s Petronas Carigali Sdn. Bhd. for Rumaila after improving the offer, Oil Ministry spokesman Asim Jihad said June 30. The group agreed to develop the field at a cost of $2 a barrel after recovering investment, lower than the prices BP and Exxon initially bid, the ministry said in a statement then.

China National Offshore, the parent of Hong Kong-listed Cnooc Ltd., offered bids for different fields in the June 30 auction, Fu said today. “Our costs are higher then $2 a barrel; we couldn’t lower that to a level that the Iraqi government can accept,” he said.

Separately, Repsol YPF SA is in talks with China National Petroleum Corp. and China National Offshore Oil Corp. about a sale of a stake in its Argentinean unit, three people familiar with the discussions said yesterday. Fu declined to comment on the possible transaction today.

--Wang Ying. Editors: Mike Millard.

To contact Bloomberg News Staff on this story: Wang Ying in Beijing at +86-10-6649-7562 or wang30@bloomberg.net;

Last Updated: July 4, 2009 04:33 EDT