Lukoil Head to Visit Iraq for West Qurna-2 Oil Talks

LONDON (Dow Jones Newswires), May 26, 2009

The head of Russia's largest independent oil producer Lukoil Holdings (LKOH.RS) said Tuesday he is due to visit Baghdad for talks on a contract to develop the West Qurna-2 oil field in southern Iraq, the RIA Novosti news agency reports.

Lukoil was involved in the development of the first phase of West Qurna and signed a contract with the Saddam Hussein regime to develop the second stage, but the deal was frozen in 2002. Iraq and Lukoil agreed in 2008 to establish a working group to amend the original contract on West Qurna-2.

"I plan a visit to Baghdad to continue the dialogue," Vagit Alekperov said. "I hope we reach an understanding and that the conditions including the company in the project are mutually acceptable."

West Qurna-2's proven recoverable reserves have been estimated at around 6 billion barrels of oil. Under the terms of the contract, output could amount to 4.8 billion barrels of oil and 56.4 billion cubic meters of associated gas. Investment in the project could reach $4 billion.

Ali Hussein Balo, chairman of the oil and gas committee of the Iraqi parliament, earlier said in an interview with RIA Novosti that Lukoil would have an opportunity to renew the contract.

Baghdad is also discussing the West Qurna-2 oil field with Chevron Corp. (CVX) and Total SA (TOT). However, analysts say that Iraq is likely to resume work at West Qurna-2 with Lukoil after Russia recently wrote off the bulk of the country's debt of around $12 billion.  

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