Iraq strikes deal with Lukoil over massive oil field

Sunday, December 13, 2009
BAGHDAD: Iraq struck a deal with Russian energy giant Lukoil on Saturday to develop one of the world’s biggest untapped oil fields as part of efforts by Baghdad to dramatically ramp up its crude output.

The agreement over the West Qurna-2 reservoir with Lukoil, which will share the project with Norway’s Statoil Hydro, comes a day after consortiums led by Shell and CNPC were awarded contracts. The seven deals reached in the two-day auction promise to increase Iraq’s oil production by more than 4.7 million barrels per day (bpd) in the coming years as the country seeks to become one of the world’s biggest energy producers and bring in much-needed revenue to rebuild its war-battered economy.

“We can announce that Lukoil has won the contract to develop the West Qurna-2 oilfield,” Oil Minister Hussein al-Shahristani said at the conference hall where the auction was held.

Lukoil and Statoil Hydro requested $1.15 for each barrel extracted from the giant field and projected output of 1.8 million bpd.

Lukoil will take 85pc and Statoil Hydro 15pc. West Qurna-2, with known reserves of 12.9 billion barrels, lies west of the equally enormous Majnoon field, which was auctioned on Friday to Anglo-Dutch firm Shell and Malaysia’s Petronas.

Shell and Petronas will receive $1.39 per barrel of oil they extract from Majnoon, which has proven reserves of 12.6 billion barrels.