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20 Sep, 2007 17:40

Lukoil to get advantage in tender for West Qurna-2 field: Iraqi FM

Iraqi Foreign Minister Hoshyar Zebari has promised that Russian oil company Lukoil will have an advantage in a tender to develop the West Qurna-2 oil field.

Lukoil’s contract to develop the West Qurna-2 field – with reserves estimated at 15 billion barrels – was terminated shortly before Saddam Hussein’s’ fall in late 2002.

The new Iraqi government has recently granted licenses to develop oil fields to the Iraqi national oil company, which will select its contractors through tenders.
Baghdad had previously made it clear that Lukoil would enjoy no advantages and will participate in tender on a level playing field. However, this seems to have changed.

“Lukoil is one of the leading oil companies in the world. It has a project for oil extraction in Iraq. This project started when Saddam Hussein ruled the country but it was stopped. We discussed everything with the head of Lukoil and we tried to find spheres of co-operation in oil extraction and refinement. The projects which had started before us must be renewed,” Hoshyar Zebari said.

Lukoil may face tough competition from American oil companies that will boost their presence in oil rich Iraq.

An oil and gas analyst, Dmitry Luytigin, says Lukoil may end up in a partnership with ConocoPhillips to develop the West Qurna-2 field.
“I think that American companies will definitely win the majority of licenses for oil fields in Iraq using political instruments to lobby for their interests. Lukoil has a chance to participate in the development of the West Qurna-2 and other deposits but through creating a joint venture with its shareholder, American ConocoPhillips,” he explained.
The companies will test the new partnership scheme in Turkmenistan – Lukoil and ConocoPhillips will set up a 50/50 joint venture to develop three offshore fields in the Caspian Sea. The Russian oil company expects to complete negotiations with Turkmenistan's Oil Ministry by 2007.