Iraq threatens to terminate oil contracts with Russian, Chinese firms
Iraq threatened Sunday to terminate contracts signed with Russian and Chinese oil firms to develop the country's southern oil fields that had not been fulfilled.
"The contracts have been signed to be carried out, and any contract that has not been honored will be terminated," Iraq's deputy oil minister Faiz Shahin warned in the weekly Al-Nassiriya newspaper.
Furthermore, Shahin said Iraq was in negotiations with Indonesian, Irish and Malaysian firms to develop its oil sector, adding that it had "signed a contract with an Indian firm for exploratory work in the south of the country."
Chinese and Russian firms have received similar warnings in the past for not honoring oil contracts to develop Iraq's southern Al-Ahdab and Al-Qorna oilfields.
The Chinese contract for the Al-Ahdab field, whose production is estimated at 90,000 barrels per day (bpd), covers an investment of $660 million over 26 years after which production will revert to the Iraqi government.
In 1997, Russia's biggest oil company Lukoil and two other Russian firms, Zarubezhneft and Mashinoimport, signed an accord with Iraq's oil ministry on developing Iraq's West Qurna oil field.
However, Lukoil has been able to carry out only a limited amount of work in Iraq so far, with the UN-imposed sanctions crippling Iraq's oil industry.
The West Qurna agreement was the first to be signed between Iraq and an international oil firm since the United Nations imposed sanctions on Baghdad in 1990 following its invasion of Kuwait.
The 23-year deal, worth $3.5 billion, covers the development of the 7.8 billion barrels of proven reserves in the Mishrif and Yamamah formations in the north of West Qurna.
Sunday's warning coincides with a visit of a delegation of 20 oil experts and businessmen from Russian firm Slavneft to discuss ways of "continuing cooperation in the oil and trade fields".
Slavneft signed an agreement with Iraq at the end of last year to take part in the development of Subba oil field, whose reserves are estimated at 100 million tones, the Interfax news agency in Moscow reported.
Iraq has turned to foreign oil companies to raise funds to develop its energy sector which was hard hit by the 1980-1988 war with Iran, the 1991 Gulf War, and the 10 years of UN sanctions.
Iraq has said it needs around $30 billion in investments in the oil sector, half of which would be for new fields, to triple its output capacity to six million bpd.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)