Iraq’s Oil Ministry has signed a 20-year deal with a group led by Russia’s Lukoil for the development of the West Qurna-2 oil field in the province of Basra.
Lukoil won the rights to develop the field as part of the second oil licensing round held on 11 and 12 December, although the project still requires cabinet approval.
Lukoil will operate the West Qurna-2 field with a 56.25 per cent stake and Norway’s Statoil will hold an 18.75 per cent share.
Iraq’s state-run North Oil Company owns the 25 per cent balance.
Lukoil says the 20-year contract can also be extended by five years if required and has submitted the contract to cabinet for ratification.
The Russian firm expects to produce up to 1.8 million barrels a day (b/d) of oil from the field which contains reserves of 12.9 billion barrels.
The contracts are part of a programme to increase Iraq’s oil production capacity from current levels of about 2.5 million b/d to 12 million b/d by 2016.
In October 2008, Baghdad rejected a bid by Lukoil to revive a deal made in the mid-1990s to explore West Qurna. The state said the contract was no longer up for negotiation. The deal between the Russian firm and Saddam Hussein’s regime collapsed in 2002. The oil ministry cancelled the contract because Lukoil refused to breach UN trade sanctions by beginning to explore the field.