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Lukoil Optimistic on New Iraqi West Qurna Deal

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West Qurna Field
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PARIS, May 30, 2007 (Dow Jones Newswires)

Russian oil producer OAO Lukoil Holdings (LKOH.RS) said Wednesday it is optimistic about its chances of getting back into Iraq to develop the big West Qurna oil field, an executive said Wednesday.

The company lost control of the field, one of Iraq's biggest existing oil fields, in 2002 after it failed to develop West Qurna according to its original $3 billion contract signed in 1997. Saddam Hussein voided the contract in 2002.

Lukoil, Russia's second biggest oil producer by production, began talks in recent months with the Iraqi government on West Qurna.

"I think there is progress being made and we hope and expect to be back (at West Qurna)," Lukoil vice president Dzhevan Cheloyants told Dow Jones Newswires on the sidelines of an industry conference in Paris.

He declined to elaborate on the company's negotiations with Baghdad, but said that any deal with the Iraqi government would come only after Iraq's long-delayed hydrocarbons oil law becomes final. A draft oil law has missed several deadlines, including the most recent for the end of May. Officials say a parliamentary vote to give final approval to the draft has been pushed back by another month or two.

Cheloyants added that any work in Iraq would take many months to resume because of the lack of security and daily threats and attacks against civilians and contractors.

West Qurna is one of the top production priorities of the Iraqi government because of its 4 billion barrels in proven oil reserves and because much is known about the field's geology and how it should be developed.

Copyright (c) 2007 Dow Jones & Company, Inc.

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