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WASHINGTON, July 21 (Reuters) - U.S. ambassador to Iraq Christopher Hill said on Tuesday that the Iraqi government needs to do more to develop the country's huge oil reserves and he hopes American companies will be selected to help boost Iraq's oil output.

"Frankly, I think they could do a lot more with their oil resources than they have," Hill said in an interview on the CSPAN public affairs network.

Iraq has the world's third-largest proven oil reserves after Saudi Arabia and Canada, totaling 115 billion barrels. There may be another 45 billion to 100 billion barrels of crude in unexplored areas in Iraq's western and southern deserts, according to the U.S. Energy Department.

Hill said the United States welcomed Iraq's recent move to allow foreign companies to help develop the country's oil fields, even though no bids were accepted from U.S. firms.

"I think it's been politically accepted in Iraq that they need to invite foreign oil companies and we hope they'll continue that. And frankly, I hope we'll get some American companies in there," he said.

Iraq held an initial auction last month, offering eight oil and natural gas fields, but a contract to develop just one field was won by a group led by BP Plc (BP.L)(BP.N). Another bidding round is expected to take place before the end of the year.

Hill emphasized that U.S. forces are not in Iraq to take the country's oil, but to help the Iraqis build their economy. "To do that they need have a prudent, but more vigorous, effort at developing their oil resources," he said.

The Iraqi government gets almost 90 percent of its revenue from oil exports. Opening more fields to foreign companies could double the country's oil production, Hill said. (Reporting by Tom Doggett; Editing by Lisa Shumaker)

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