MOSCOW, 12 March 2004 — Russia’s oil giant Lukoil announced yesterday that it had signed a framework agreement with the Oil Ministry of Iraq that will decide how the company will operate in the war-torn nation. “A cooperation agreement has been signed in Baghdad” on Wednesday, a company spokesman told AFP by telephone yesterday.
A statement from Russia’s number two oil producer quoted Lukoil chief Vagit Alekperov as saying that he signed a “memorandum of understanding and future cooperation” during a meeting with Iraq’s new Oil Ministry officials in Baghdad.
Alekperov said the signing was a positive step, but did not disclose further details of the agreed document.
Lukoil said that the company had agreed to “help restore the material and technological base of the Iraqi Oil Ministry,” which has been largely ravaged by the year-old war. “I view the signing of this memorandum as a positive step for the development of our future dialogue with the Iraqi side,” Alekperov said in the Lukoil statement.
“This confirms our desire to have long-term cooperation with the Iraqi Oil Ministry,” Alekperov was quoted as saying in Baghdad by the company. There was no immediate reaction from Iraqi officials.
Lukoil is trying to win back rights to the huge West Qurna-2 oil field that is believed to hold reserves of at least 15 billion barrels of oil.
The fallen regime of Saddam Hussein scrapped that agreement months before the US-led forces launched their war on Iraq, and the new Iraqi government has so far refused to give a definitive answer as to whether Lukoil can keep its rights to the field. Lukoil has claimed on several occasion to have won back the West Qurna-2 contract, but Iraqi officials have always denied the comments later.
In December, Baghdad formally requested Russia choose a replacement company to develop West Qurna-2 after Lukoil reportedly began to prepare contingency plans in case Saddam was actually ousted.
Lukoil’s maneuver sparked indignation in Baghdad amid private complaints that one of Iraq’s closest international allies was turning its back on Saddam’s regime in the face of danger.
The dispute threatened to mire Russia’s massive oil investments in Iraq that have been all but frozen because of tough UN sanctions, and a senior Moscow delegation traveled to Baghdad this week to confirm new contracts and try to unblock the Lukoil dispute. But the company also appears to have made few inroads with the new Iraqi leaders, linked closely to the United States, despite repeated visits to Baghdad by Lukoil executives.
Lukoil held a 68.5-percent share in a consortium to develop West Qurna-2 with two other Russian companies that was signed in 1997. Under the agreement, Lukoil was to invest some $4 billion in the site’s development by 2020, although the company has been unable to exploit the site due to existing UN oil embargoes on Baghdad.
