Russian-led group signs deal to develop huge Iraqi oil field
By Sinan Salaheddin |
December 30, 2009, Wednesday
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A CONSORTIUM led by Russia's private oil giant Lukoil yesterday signed an initial deal with Iraq to develop one of its biggest oil fields, an agreement key to the nation's efforts to boost output of a resource crucial to postwar reconstruction efforts.
Lukoil had partnered with Norway's Statoil ASA to bid to develop the 12.88 billion barrel West Qurna Phase two field, the crown jewel of the 15 fields offered during Iraq's second postwar oil licensing round earlier this month.
Under the 20-year deal which is due to be presented to Iraq's Cabinet tomorrow, the companies plan to produce 1.8 million barrels per day in 13 years and will be paid US$1.15 per barrel of crude they produce from the southern field.
Lukoil's vice president of strategy and business development, Dmitry Timoshenko, hailed the signing as an important step forward in its work with the Iraqi government.
"Now we are waiting for the other legal procedures to be completed," he said. "We hope that these procedures will be concluded soon so that we can start our work as soon as possible."
For Iraq, the deal marks a crucial step forward in the country's so-far faltering bid to raise oil output.
Although it sits on top of the world's third-largest proven reserves of crude oil, Iraq produces about 2.5 million barrels per day, of which about 1.9 million barrels a day are exported.
Decades of neglect of the fields have been compounded by the effects of the fighting and sabotage in the wake of the 2003 United States-led war to oust Saddam. That violence has meant that Iraq has been unable to reach even its prewar output levels of oil.
The oil auction earlier this month was crucial for Iraq, during which seven deals were awarded. At the first round of bidding in June, only one deal was signed on the spot and interest was only in the safest and cheapest fields to develop.
At the second auction interest was again focused on fields in the relatively calm and stable Shiite heartland in the south and US supermajors such as Exxon Mobil failed to even bid, let alone win, any of the fields.
Lukoil and Statoil beat three other consortia led by Britain's BP Plc, France's Total SA and Malaysia's state-run Petronas.
Lukoil had partnered with Norway's Statoil ASA to bid to develop the 12.88 billion barrel West Qurna Phase two field, the crown jewel of the 15 fields offered during Iraq's second postwar oil licensing round earlier this month.
Under the 20-year deal which is due to be presented to Iraq's Cabinet tomorrow, the companies plan to produce 1.8 million barrels per day in 13 years and will be paid US$1.15 per barrel of crude they produce from the southern field.
Lukoil's vice president of strategy and business development, Dmitry Timoshenko, hailed the signing as an important step forward in its work with the Iraqi government.
"Now we are waiting for the other legal procedures to be completed," he said. "We hope that these procedures will be concluded soon so that we can start our work as soon as possible."
For Iraq, the deal marks a crucial step forward in the country's so-far faltering bid to raise oil output.
Although it sits on top of the world's third-largest proven reserves of crude oil, Iraq produces about 2.5 million barrels per day, of which about 1.9 million barrels a day are exported.
Decades of neglect of the fields have been compounded by the effects of the fighting and sabotage in the wake of the 2003 United States-led war to oust Saddam. That violence has meant that Iraq has been unable to reach even its prewar output levels of oil.
The oil auction earlier this month was crucial for Iraq, during which seven deals were awarded. At the first round of bidding in June, only one deal was signed on the spot and interest was only in the safest and cheapest fields to develop.
At the second auction interest was again focused on fields in the relatively calm and stable Shiite heartland in the south and US supermajors such as Exxon Mobil failed to even bid, let alone win, any of the fields.
Lukoil and Statoil beat three other consortia led by Britain's BP Plc, France's Total SA and Malaysia's state-run Petronas.
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