Iraqi-Russian venture makes slow progress

Russia's Lukoil has made a little progress towards development of Iraq's West Qurna oil field as it awaits lifting of United Nations sanctions against Iraq. Middle East Economic Survey reported that Lukoil has prepared a plan to install equipment with capacity to produce 100,000 b/d of oil from the field's Mishrif formation by March 2000. West Qurna is one of a handful of Iraqi field development projects promised to foreign firms for when U.N. sanctions against Iraq are lifted (OGJ,

Oct. 5, 1998

2 min read

Russia's Lukoil has made a little progress towards development of Iraq's West Qurna oil field as it awaits lifting of United Nations sanctions against Iraq.

Middle East Economic Survey reported that Lukoil has prepared a plan to install equipment with capacity to produce 100,000 b/d of oil from the field's Mishrif formation by March 2000.

West Qurna is one of a handful of Iraqi field development projects promised to foreign firms for when U.N. sanctions against Iraq are lifted (OGJ, Apr. 14, 1997, p. 19).

MEES added that Lukoil has selected its Zmnevolzhskneftj unit to carry out preliminary design work and chosen four firms to bid for engineering and development.

The potential bidders are: SNC Lavalin International Inc., Calgary; Technipetrol SpA, Rome; Techno Export of the Czech Republic; and Lukoil-Nizhnevolzhskneft.

Lukoil is currently interpreting geophysical and geological data from West Qurna provided by the Iraqi Ministry of Oil. The operator has allocated $200 million for preliminary work and purchase of materials until June 2000.

In March 1997, Lukoil signed an agreement to develop 7-8 billion bbl of oil over 23 years from West Qurna's Mishrif and Yamamah formations, at an estimated cost of $3.5 billion.

Problems

In addition to having to wait for lifting of U.N. sanctions, Lukoil has been hampered by difficulty in finding Iraqi firms capable of carrying out 3D seismic or drilling work.

MEES reported that the rigs owned by Iraqi Drilling Co. are old, with no spare parts or stocks. So far, Lukoil has spent about $20 million on initial field work and purchase of supplies outside Iraq.

Meanwhile, Baghdad has told the U.N. it has no intention of resuming full cooperation with arms inspection teams that are cataloging Iraqi arsenals in an attempt to prove that all major weapons have been destroyed.

At OGJ presstime, U.N. Sec. Gen. Kofi Annan was expected to meet within a few days with Tariq Aziz, Iraq's deputy prime minister, in a bid to end the deadlock between Baghdad and the U.N. over weapons inspections.

Once again Iraq appears to be aiming to divide the U.N. Security Council in a bid to get sanctions lifted. The U.S. and U.K. are against lifting sanctions until Baghdad proves it has no major weapons, while China, France, and Russia-each with oil companies promised redevelopment projects-saying they want to end sanctions for humanitarian reasons.