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9 Feb, 2010 07:49

Lukoil eyes profit in Iraq

Russia's largest private oil company, Lukoil, has told RT it can make a profit from its huge investment in Iraq.

The head of the firm's overseas operations, Andrey Kuzyaev, admitted that these days they must take risks to make a profit. West Qurna contains the world's second largest known oil reserves. In December Lukoil and Norway's Statoil won the right to develop stage 2 of the project. The companies will earn only $1.15 a barrel under their contract with Iraq's oil ministry, but Kuzyaev says the $30 billion investment is worth it.

“Deposits in Iraq are incomparable with those in any part of the glove. Developing the world’s largest hydrocarbon fields stimulates technology and supports contractors with Russian companies among them.”

Experts say when Iraqi hits full-scale production, world prices will fall. Kuzaev denied the claims.

“Iraq is a part of OPEC – and the organization won't let it happen. With falling oil production worldwide, Iraqi oil may be just enough for a resurgent global demand.”

It's not just about short-term gains. Production in Iraq will give Lukoil greater access to the fast-growing markets of Southeast Asia and China.

Lukoil is also moving into Venezuela, with the $20 billion Orinoco Belt project.

“We understand the risks of working in Venezuela and we do share the views of analysts in this regard. It’s not just an agreement between us and PDVSA above it we have the agreement between the two governments that state very clearly the issues of regulating and operating these risks.”

In today's world, Kuzaev admits, oil companies have to take increasing risks to make a profit.