Between the second and the first

LUKOIL will bid for West Qurna-1 in Iraq

LUKOIL appears to be planning to expand its position in Iraq. As the vice-president of the company, Leonid Fedun, said late last week, LUKOIL intends to participate in the development of the West Qurna-1 field. “This is a completely different project. And although we continue to insist that West Qurna 2 belongs to us, we wanted to take part in this tender announced by the Iraqi government,” he said.

West Qurna is the largest crude oil field in Iraq. Its proven reserves are estimated at 15 billion barrels. Experts find it difficult to say how many of them are in West Qurna-1, but it is obvious that this field is superior to West Qurna-2 (according to various estimates, its reserves amount to 4-6 billion barrels). Service work at West Qurna-1 was carried out back in Soviet times by Zarubezhneft and Zarubezhstroy, but after the outbreak of the first Gulf War and the subsequent sanctions against the country, as well as due to the collapse of the Soviet Union, their activities in the territory Iraq was collapsed.

At first, the West Qurna field was completely controlled by the Iraqi authorities through the state-owned Southern Oil company. However, then it was decided to involve foreign companies in its development. In 1997, Russian LUKOIL, as a representative of the country most loyal to Iraq, managed to obtain a share in West Qurna-2 - 68.5%, another 3.5% went to Mashinoimport and Zarubezhneft, and 25% was retained by the Iraqi government . However, in 2002, in the midst of preparations for the American invasion of the republic, the contract with the Russian oil company was terminated. Officially, this was done due to the fact that LUKOIL did not start drilling, but the Iraqi authorities were well aware that it simply did not have the opportunity to import the necessary equipment into the country due to the sanctions imposed. In fact, Saddam Hussein's regime could not forgive the fact that ideological enemies - American companies and funds - became shareholders of LUKOIL. Since then, LUKOIL has been trying to regain its rights to West Qurna-2, but the Iraqi administration has tirelessly stated that it considers the contract to be cancelled. Even the almost complete write-off of Iraq’s debt by the Russian authorities, including for the work of our companies in the development of West Qurna, did not help to improve the situation. At the same time, contracts concluded during the Saddam Hussein regime with Chinese companies and also canceled are being resumed in full swing - at the end of last week, all rights to fields in Wassit province were returned to CNPC.

Nevertheless, LUKOIL, apparently, is now going to defend the rights to West Qurna-2 with its American shareholder ConocoPhilips, and while this process is not completed, it, on the advice of the Iraqi ministers, “on a general basis” is going to compete for West Qurna-2. 1". This spring, Iraqi authorities announced that they were going to tender for service contracts. “This area has been developed by the Iraqi side for a long time,” says Troika Dialog analyst Valery Nesterov. “Now the question has arisen of attracting foreign companies to the work.” Chevron and Total have already shown their interest in this field. “LUKOIL has a good chance of getting service contracts for West Qurna-1, because the company has already established itself in Iraq. And naturally, the Iraqi administration will be guided by the company’s reputation when making its choice,” says Mr. Nesterov. According to the analyst, LUKOIL’s ultimate goal is, of course, not service work at West Qurna-1. “By winning the tender and concluding a contract for a year or two, LUKOIL in the future will have the opportunity to remain in the project further and engage in oil production at the field,” the expert believes. True, he recalls that due to the oil law that has not yet been adopted in Iraq, the future prospects for the Russian company to work in the country remain unclear.

Kirill MELNIKOV