World's Energy

12 February 2008 - Upstream OnLine - Iraq is ready to study the possibility of reviving old deals, including in the oil sector, which were signed between Russian companies and the government of Saddam Hussein, Foreign Minister Hoshiyar Zebari said today. "We are not hiding from existing problems, such as the old contracts," Reuters quoted Zebari telling a news conference, speaking through an interpreter. Yesterday Zebari and Russia's Finance Minister Alexei Kudrin agreed to write off most of Iraq's $12.9 billion debt and signed a separate deal opening up Iraq for $4 billion in investment from Russian companies, including Lukoil. Lukoil hopes to revive its $3.7 billion deal to develop the West Qurna, oilfield. Zebari said Russia and Iraq will set up a working group to study the old projects. But he also repeated a standard Iraqi government line that all companies will be treated equally and there will be no special treatment to anyone. "Doors are open to Russian companies in all areas but only on equal conditions," said Zebari. Kudrin said yesterday the debt write-off became possible after Iraq agreed to sign a memorandum promising good treatment of Russian companies, although he added the memorandum had no legal force. The memorandum marked years of attempts by Moscow to revive Saddam-era deals since the US-led invasion toppled the dictator in 2003. Lukoil said yesterday it would be ready to start works on West Qurna within three to five years after getting all permissions from the Iraqi government. Analysts had long been sceptical about Lukoil's chances of returning to West Qurna given the heavy US influence over Iraq's government. In 2004, US supermajor ConocoPhillips became a strategic partner in Lukoil as it took a 20% stake and agreed to work together with Lukoil in Iraq in a move boosting the market sentiment about the prospects of the deal revival. Lukoil said the field can produce 600,000 barrels per day within a few years from its launch. The world's top oil companies have been manoeuvring to win a stake in oilfields in Iraq despite huge damage to the country's infrastructure from decades of wars and sanctions. Moscow had already forgiven Iraq the bulk of its debt under a deal with Paris Club group of creditors, under which Russia and other states agreed to forgive 80% of Iraq's debt following the US-led invasion. The remaining $12.9 billion dated back to Soviet-era supplies of military equipment.