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9 Sep, 2009 06:40

Russia looks to return to Iraqi oil development

Russia is close to gaining access to the Iraqi oil and gas market with Russia's Energy Minister in Baghdad for 2 days of negotiations, trying to revive deals dating back to the Saddam Hussein era.

The door is open and everyone’s cramming through it. That‘s how a Russian delegate describes the situation in Iraq. Russia already has some advantage – it worked there a decade ago and Iraqis are familiar with Russian technologies, according to Iraqi oil Minister Hussain al-Shahristani

“Definitely there’s desire on both sides, that Russian companies work in Iraq. But on the basis of competitiveness and licensing. We think they are qualified enough and a have a long experience working in Iraq and can hold any competition. We intend to invite these companies to all our tender rounds.”

In 1996 a Russian consortium including Lukoil signed a $3.7 billion deal to develop Iraq's West Qurna field. Saddam Hussein tore up the deal just months before the U.S. led invasion of 2002 – creating a stumbling block in Russian – Iraqi relations.

He claimed the consortium had failed to keep to its end of the deal. Since then Russia has been trying to restore those contracts, but Russian Energy Minister, Sergei Shmatko, says there has been little with little progress.

“We have a certain baggage concerning contracts from previous years. We agreed to give a new impetus to solving this problem in the near future. Most important is that we do not try to solve these problems by dividing old property, but coming from the idea that we want a joint future.”

Russian oil companies are also interested in the West Qurnha oil field, which is estimated at 12.9 Billion barrels. In June during the first round of the auction, Lukoil made a failed bid with ConocoPhillips. But not all is lost, as the second round is scheduled for December.

Read also: Russia outstrips Saudi Arabia in oil export