Support The Moscow Times!

LUKoil Going to Iraq Alone, But Rosneft May Join It Elsewhere

LUKoil sealed a 20-year deal to develop the untapped West Qurna Phase-2 oilfield in an auction in December 2009. Above, LUKoil's Moscow headquarters. Andrei Makhonin

BARCELONA, Spain — Russia's second-largest crude producer LUKoil will be able to develop Iraq's West Qurna-2 oilfield without partners, the company's president Vagit Alekperov said Friday.

But Alekperov, speaking in the Spanish city of Barcelona, where LUKoil was holding a board meeting and opening an oil product terminal this week, said LUKoil was ready to allow state company Rosneft to join its other overseas projects.

Last month, Iraq approved the sale by Norway's Statoil of its minority stake in the giant oil field to LUKoil, making the Russian firm the sole foreign partner in one of Iraq's biggest new oil projects.

"Today we are able to implement this project by ourselves," Alekperov told reporters.

LUKoil sealed a 20-year deal to develop the untapped West Qurna Phase-2 oilfield in an auction in December 2009, pledging to boost output to a plateau target of 1.8 million barrels per day in six years.

Nonstate LUKoil is also active in Central Asia, West Africa and Latin America. But Russia's vast Arctic offshore reserves are off-limits for the company due to legal restrictions, which allow only state-controlled entities, such as Rosneft and Gazprom, to develop such deposits.

Earlier this month LUKoil, Surgutneftegaz, TNK-BP and Bashneft signed a petition to Prime Minister and President-elect Vladimir Putin asking him for offshore access.

Rosneft, which has just struck multibillion-dollar agreements with ExxonMobil and Eni, has said it invited the companies to its offshore projects.

Alekperov told reporters that LUKoil offered Rosneft participation in its foreign projects as part of the deal to enter offshore development.

"We have exploration blocks in third countries, which we are ready to offer on mutually beneficial conditions," he said.

LUKoil needs more access to untapped oil and gas, as its production at brownfields is declining.

Alekperov said overall oil production will stabilize this year "or will be a bit higher than in 2011" after it fell by about 5 percent to 90.7 million tons last year.

Read more