LUKOIL interested in expanding operations in Iraq

Azerbaijan, Baku, March 23 / Trend /

Commissioning of the largest Iraqi field West Qurna-2 is expected in late 2013 or early 2014, president of the Russian oil company LUKOIL, which owns a controlling stake in the project, Vagit Alekperov said in an exclusive interview to Russia Today.

"We have passed the most difficult period within the West Qurna-2 project, including the formation of groups, safety system, contractors, passing all procedures at the ministry of oil and Southern Oil Company. Today we are on the final stretch. Production will start on this field next year," Alekperov said.

The company also plans to start active exploration works on Block 10 along with partners from Japan.

West Qurna-2 field was opened with participation of Soviet geologists in 1973. It is the second-largest undeveloped field with recoverable oil reserves of about 14 billion barrels. The deposit area totals 340 square kilometers. It is located in the south of Iraq, 65 kilometers north-west of the large port city of Basra.

The contract for the development and production in the West Qurna-2 field was signed on 31 January 2010 for 20 years, renewable for five years. Shares of participants in the project are distributed as follows: LUKOIL - 56.25 per cent, the Iraqi state North Oil Company - 25 percent, Statoil ASA - 18.75 percent. In 2012, Statoil announced its withdrawal from the project and transfer of its share to LUKOIL. Subsequently, LUKOIL announced its readiness to develop the project on its own, without a partner. However, the company does not rule out the possibility of attracting other strategic Western or Russian partners to share risks.

"Today, a number of companies offers us partnerships on this project. Proposals came from Chinese companies. However, discussions are underway. To date, we implement this project independently," Alekperov said.

However, Alekperov stated that, if there is a good partnership offer, cost effective for LUKOIL, or making it possible to effectively place enormous amounts of oil in a particular market, "we are interested in finding such a partner for this project".

On January 17, 2013, LUKOIL and the Iraqi government signed a supplementary agreement for West Qurna-2 oil field, according to which the total contract period was extended from 20 to 25 years. In late 2013 - early 2014, LUKOIL plans to reach commercial production on West Qurna-2, and the company's investment by that time (in 2013) will reach $5 billion. Total investment in the project is estimated at nearly $ 30 billion.

According to Alekperov, LUKOIL is also interested in participating in another Iraqi project, Nasiriya, along with local and international companies.

"We are open to partnership, we have partnerships with all the major companies of the world," Alekperov said.

The project for integrated development of the Nasiriya field involves the development of deposit reserves that exceed four billion barrels, and construction and operation of the refinery with processing capacity of 300,000 barrels per day. The field is located in the province of Dhi Qar in southern Iraq.

The Government of Iraq has selected seven international oil companies to participate in the tender for comprehensive development of the Nasiriya oil field and construction of a refinery in the field area. According to the Ministry of Oil of Iraq, according to the pre-qualification selection, Iraq has sent formal invitations to tender to two Russian companies - Zarubezhneft and LUKOIL, as well as Chinese CNPCI, American Brown Energy, India's Reliance Industries, France's Total and Japan's JGC & Tonen General.

Iraqi Oil Minister said the country plans to invest $173 billion in the oil sector in the next five years.

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