MOSCOW, April 10 (Reuters) - Russia and Iraq have agreed to work on restoring contracts that they signed before the U.S.-led invasion of Iraq in 2003, Russia's energy minister said after the two countries' prime ministers met on Friday.
Russian oil major LUKOIL, in consortium with other Russian
firms, signed a $3.7 billion deal to develop Iraq’s West Qurna
oil field in 1996, when Saddam Hussein was in power.
“The goal has been set to restore the contracts concluded
between Russian and Iraqi companies before the war,” Energy
Minister Sergei Shmatko said, adding that a working group on the
issue would convene in the near future.
“I believe that this is a very big move,” he told reporters
following the meeting between Russian Prime Minister Vladimir
Putin and Iraq’s Nuri al-Maliki in Moscow, at which Putin
accepted an invitation to visit Iraq.
Saddam’s government tore up the LUKOIL deal in 2002, months
before the invasion, saying the Russian company had done no work
at West Qurna since signing it and had failed to fulfil its
contractual obligations.
Russia opposed the invasion in 2003.
LUKOIL has since lobbied for the current government to
honour Saddam-era contracts.
JP Morgan said in March last year that, according to Russian
estimates, production at the field was expected to peak at
700,000 barrels per day. “Reserves could total 4.5-7.3 billion
barrels…” the bank said.
Russia agreed last year to write off most of Iraq’s
remaining $12.9 billion debt and signed a separate deal to open
up the country to $4 billion in investment from Russian firms
but the agreement did not help LUKOIL win back the Qurna deal.
Iraq has previously said LUKOIL would have to compete with
other firms for the contract. But Baghdad has renegotiated and
signed another Saddam-era deal, with the Chinese National
Petroleum Company.
IMPORTANT PARTNERS
“Iraq remembers well Russian companies which had helped us
in different areas including oil and gas industry … We are
convinced the Russian companies can and should be our important
partners,” Maliki said in a statement.
Shmatko said Putin had received guarantees that Russian
companies would receive equal treatment in drilling and oil
services tenders announced by the Iraqi government.
Iraq last year opened up some of its most prized oil and gas
fields to international firms that have been excluded for
decades, part of new deals that could more than double its
output within a few years.
Two of the oilfields — Majnoon and West Qurna Phase II —
are classed as super giants and between them could produce 1.2
million barrels per day (bpd) when fully developed.
A LUKOIL source told Reuters in February the company would
be interested in bidding for two fields offered in a round
involving 11 oil and gas fields, including West Qurna and
Rumaila.
Shmatko praised the Iraqi government’s effort to provide
security for foreign workers and said Russia had also received
“tempting offers” to work on reconstruction and upgrading of
Iraqi power plants.
Putin said Russia and Iraq also discussed military
cooperation, which, he said, was in a stage of “practical
contacts”. Soviet Union supplied Saddam’s army with weapons and
Russia is keen to regain former Soviet export markets.
(Reporting by Gleb Bryanski, editing by Anthony Barker)
