Lukoil-ConocoPhillips to bid for West Qurna-2 oil field

08 December 2009

Russian-US consortium seeks to develop unexploited reserves in Basra

Russia’s Lukoil and the US’ Conoco-Phillips were expected to submit a joint bid to develop the giant West Qurna-2 oil field in Iraq in Baghdad’s second licensing round as MEED went to press, according to sources close to the field auction.

Baghdad hopes to award licences to develop 10 as yet unexploited oil and gas fields in Iraq, including West Qurna-2, in the country’s second licensing round on 11 and 12 December.

Oil production in Iraq - graph

A consortium of the US’ ExxonMobil Corporation and the UK/Dutch Shell Group beat the Russian-US consortium in the first licensing round on 5 November, winning the contract to develop the first phase of the field in Basra province.

“Lukoil and ConocoPhillips have nothing to show yet from the first bid round or direct negotiations, so they are looking very seriously at making a firm bid for West Qurna-2,” says an executive close to the two companies. “There is a belief internally that they have the right financial and production formula.”

The two phases of the field boast combined reserves of 12.9 billion barrels of oil.

In October 2008, Baghdad rejected a bid by Lukoil to revive a deal made in the mid 1990s to explore West Qurna, saying 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.

In May, Lukoil tried to resurrect the deal with Iraq’s Oil Ministry to develop phase two of the West Qurna field, but again Baghdad rejected the deal.

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