Lukoil Says it Won't Relinquish West Qurna Contract

Lukoil said it would not relinquish the lucrative Iraqi oil field of West Qurna-2. "The fact is that Lukoil's project at Western Qurna-2, Iraq, has proven oil reserves of one billion metric tons, thus exceeding the remaining reserves of the legendary Surgut and Samotlor fields as a whole," said Azat Chamsouarov, vice-president of Lukoil Overseas Holding, referring to two Russian oil fields.

"For this reason, the government of the Russian Federation has set a very clear position: Lukoil is not to concede Western Qurna-2 under any circumstances," said Chamsouarov during the meeting of the European Bank for Reconstruction and Development (EBRD) being held in the Uzbek capital.

Earlier this year, a top US energy expert close to the White House, Robert Ebel, warned that Russian companies had little hope of fulfilling contracts to develop Iraq's vast oil reserves because of Russia's fierce opposition to the US-led war.

Lukoil has threatened to seek a court injunction from an international tribunal in Geneva to block any attempts by competitors to develop the field and to seize all Iraqi crude if the country's post war administration throws out the lucrative contract.

Lukoil signed a contract in 1997 to develop the oilfield with the Iraqi energy ministry and two other Russian companies. Under the agreement, Lukoil was to invest about $4 billion in the site's development by 2020, although the company has been unable to exploit the site due to UN oil embargoes on Baghdad.

Baghdad cancelled the deal in December amid reports that Lukoil was negotiating possible post war scenarios with exiled Iraqi opposition groups. It reiterated the cancellation in February, but Lukoil insists it still owns the exclusive right to develop the oilfield.