Lukoil Eyes 150,000 B/D from Iraq West Qurna-2 in 2013 - Source

LONDON (Dow Jones Newswires), Nov. 30, 2010

Lukoil, Russia's largest non-state oil producer, aims to produce 150,000 barrels a day at Iraq's supergiant West Qurna Phase 2 in January 2013, a person familiar with the project said Tuesday.

"This is the early oil production from the field and it is hoping to achieve 500,000 barrels a day from the field in January 2014," the person told Dow Jones Newswires on the sidelines of an Iraqi petroleum conference in London.

The Moscow-based firm, along with its partners, Norway's Statoil and Iraqi state-run South Oil Co., plans to start drilling 70 new wells in the field in southern Iraq beginning of next year, the person said.

The person also said Lukoil will award several projects to oil services companies during the first quarter 2011.

"The projects are a power station, a gas treatment plant, oil export pipeline, oil gathering system, a storage plant," he said. The company announced tenders for these projects in September.

Lukoil and Statoil were awarded a 20-year service contract for West Qurna Phase 2 in Iraq's second licensing round last December. The companies promised to get the southern field pumping at a rate of 1.8 million barrels a day for payment of $1.15 a barrel.

In October, Lukoil awarded a 3D seismic survey deal for the West Qurna-2 project to Terra Seis Trading Ltd. In September it awarded a mine clearing contract to a division of the London-based G4S Ordnance Management.

The development project is one of 11 that Iraq awarded in two licensing rounds last year. If all the companies deliver to the letter of their contracts, nearly 10 million barrels a day of capacity will be added to Iraq's existing 2.35 million barrels a day by 2017.

Iraq, which depends on oil sales for most of its revenues, is seeking foreign investors to boost output after seven years of conflict and prior sanctions destroyed its infrastructure. The country auctioned oil-development rights last year and awarded three gas fields this year.

Copyright (c) 2010 Dow Jones & Company, Inc.


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