Russia will dismiss a $12.9 billion debt incurred by Iraq, paving the way for $4 billion in investments by Russian companies such as Lukoil, said Russian Finance Minister Alexei Kudrin.
Kudrin said that Russia has attempted to revitalize investments in the war-torn country since the U.S.-led invasion of 2003, rebuilding the bridge to projects Russia had previously operated.
Kudrin named Lukoil among the top investors for the new deal. Prior to the U.S. invasion, Lukoil's West Qurna deal in Iraq was worth a reported $3.7 billion, involving one of Iraq's biggest oil deposits.
The previous deal also included Lukoil's access to Rumaila, which is another large oil deposit in Iraq.
Iraq claims the 1997 deal would have to be renegotiated, but Lukoil is stating the deal is still valid.
"We will now be waiting for permission from the government of Iraq to start working on the field," said Lukoil Vice President Leonid Fedun. "This memorandum states that the Iraqi government will support our intentions. We would now be keen to review some perameters, refresh the contract, and as soon as it is done, we will be ready to invest. The memorandum says it could happen within three to five years."
Lukoil estimates that the field could produce 600,000 bbl/d as soon as the company can initiate production startup.
ConocoPhillips is Lukoil's partner in the Iraqi project. In 2004, ConocoPhillips became a "strategic equity investor" in Lukoil. The two companies have since then created various joint ventures to develop resources in various parts of the world.
ConocoPhillips was unavailable for comment at press time.
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