New Iraqi administration rejects $3.8 billion LUKoil deal
Iraq’s newly appointed oil minister Thamir Ghadhban has confirmed that the US appointed Iraqi administration has no intention of re-activating a cancelled oil contract to Russia’s LUKoil.
In an interview with the BBC on Monday, Ghadhban said that the administration has canceled or suspended three oil contracts with Russian and Chinese firms that had been signed under Hussein's regime. According to the contract signed by LUKoil, the company was to commence operations on the West Qurna-2 field as soon as the UN sanctions regime against Iraq was lifted.
Iraq broke the $3.8 billion oilfield development contract, for the second time, with Russian oil giant LUKoil in February. The contract to develop the West Qurna-2 oil field, originally signed in 1997, was cancelled for the first time in December when the Iraqi government demanded LUKoil be replaced by another Russian company. The contract was scrapped presumably because Lukoil was conducting quiet talks with the United States and Iraqi opposition.
The Iraqis accused LUKoil of trying to guarantee its rights to the field in case a US-led military strike on Iraq topples President Saddam Hussein’s regime and institutes a new government. The deal cannot be implemented as long as UN sanctions are in place.
LUKoil spokesman Dmitry Dolgov said the company still considers its Iraqi contract valid and would sue any new contender for the field for at least $20 billion. "We will hold negotiations on the contract when there is a sovereign, internationally recognized government in place in Baghdad," he said in Moscow Times. "But if we are stopped we will take our case to the Geneva arbitration court."
Iraq sits atop the world's second-largest oil reserves, after Saudi Arabia. West Qurna-2 oilfield is estimated to contain about 2.5 billion tons of oil reserves. It is expected, once operated, to have the capacity to produce up to 600,000 barrels of oil per day (bpd). — (menareport.com)
© 2003 Mena Report (www.menareport.com)