Lukoil, Partners Award Deal to Drill 23 Iraq Wells

LONDON (Dow Jones Newswires), July 14, 2011

Lukoil and its partners have awarded a deal to a "known" service company to drill some 23 new wells at Iraq's supergiant West Qurna Phase 2, a person familiar with the project said Thursday.

"The central contracts committee at the Iraqi Oil Ministry is studying the contract and we expect them to take a decision shortly," the person told Dow Jones Newswires.

Along with Norway's Statoil and Iraq's state South Oil Co., Lukoil is expected to award four other major deals in August to help develop the 12.9-billion-barrel field located in Basra governorate in southern Iraq.

The four contracts include a crude processing facility, a 126-megawatt power station, an export pipeline linking the field with a tank farm in Tuba near Iraq's southern export terminals, and six large storage tanks, the person said, adding the largest contract would be the crude processing facility.

The person said that Lukoil has shortlisted five oil services companies for this plant--Saipem, SNC-Lavalin Group, Punj Lloyd, Globalstroy-Engineering and South Korea's Samsung Engineering.

For the power station the Russian supermajor has received offers from a number of companies such as Petrofac and Greece's ENKA, the person said.

The contracts are part of an initial development plan to start production from the untapped oil field, set by Lukoil and Statoil and approved by Iraq's Oil Ministry last year. They are expected to help production at the field hit 150,000 barrels of oil a day in 2013, the person said.

Lukoil and Statoil were awarded a 20-year service contract for West Qurna Phase 2 in Iraq's second licensing round held in December 2009. 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.

The development project is one of several that Iraq awarded last year with the ambitious objective of expanding its oil production capacity to 12 million barrels a day by 2017. But Iraq's oil minister said last month that Baghdad was considering scaling down this goal and could renegotiate deals.

Copyright (c) 2011 Dow Jones & Company, Inc.


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