Lukoil Regains Iraqi Contract

Lukoil has been given a second chance by Iraq to develop the West Qurna-2 field. The original $3.7 billion contract was signed in 1997. However, in December, the Iraqi government cancelled the contract because Lukoil was presumably conducting talks with the United States to guarantee its rights to the field in the event the U.S. ousted President Saddam Hussein's regime. The deal cannot be implemented as long as UN sanctions are in place.

As a result of meetings earlier this week between a high-level Russian delegation and Iraqi officials, Russian has been granted three licensing concessions. Two other licensing contracts were advanced.

Block 4 in the Western Desert oilfield was awarded to Gazprom's construction arm Stroitransgaz, while Soyuzneftegaz was contracted to develop the Rafidain field in southern Iraq. Preliminary approvals were given to state-owned Zarubezhneft for a concession to develop the giant Nahr Umr Field and for Tatneft for block nine in the Western Desert.

According to Mena Report, the West Qurna-2 oilfield is estimated to contain about 2.5 billion tons of oil reserves. It is expected once operated, it will have the capacity to produce up to 600,000 barrels per of oil day (bopd). Iraq sits atop the world's second-largest oil reserves, after Saudi Arabia.