Iraq: 1-year limit on no-bid contracts

But Iraqi officials have said the government is negotiating short-term technical service contracts with Royal Dutch Shell PLC, BP PLC, Exxon Mobil Corp., Chevron and Total to boost oil production by 500,000 barrels per day.

The U.S. State Department has said it provided advisers to help draft the contracts, which led to an outcry in Washington.

Four Democratic senators, including Senator Carl Levin, on Wednesday called on the State Department's inspector general to investigate whether agency employees encouraged oil deals between Iraq and Western companies.

The State Department insists it only provided technical advice and did not influence the process of granting contracts.

Iraq is now producing about 2.5 million barrels of oil per day, its highest rate since the U.S.-led invasion in 2003. The government hopes to produce 4.5 million barrels per day by 2013.

Iraq has more than 115 billion barrels of oil in its reserves, but its oil industry has been battered by years of war and U.N. sanctions.

Violence in Iraq is at its lowest level in four years, allowing a spike in production. But the process of awarding development contracts has been delayed by the inability to finalize a new law on how to divide the country's oil resources. Negotiations over the law have been stalled by political squabbles between the central government and the Kurds, who want more local control over their oil fields.

The Kurdish regional administration in northern Iraq has signed more than 20 oil deals with foreign firms to work in Kurdish-controlled fields since it drafted its own oil and gas law in August 2007.

The Shiite-led Iraqi central government says the deals are invalid with no national oil law in place.