Lukoil is loading its first tanker of crude at Basra as part of an agreement with Iraq’s Oil Ministry to recover costs from the West Qurna 2 field project being developed by the Russian company.

Lukoil started production on the first phase of West Qurna 2 in southern Iraq in March and has ramped output up to 280,000 barrels a day (b/d).

The successful start-up of the field allows Lukoil to recover costs by independently exporting Oil-Ministry crude from Basra, with the first tanker set to export 1 million barrels from the southern port.

“It is the first crude carrier to transport buy-back oil that belongs to Lukoil in accordance with the terms of the West Qurna 2 service contract,” says the firm.

The first phase of the project, named Early Oil, will boost capacity to 400,000 b/d, while Lukoil has tendered the main engineering, procurement and construction (EPC) packages for the second phase.

The second phase, also known as the Mishrif Full Field Development, will increase production by 150,000 b/d to 550,000 b/d. Lukoil has hired Australia’s WorleyParsons as the project management consultant (PMC) for the expansion.  

The final phase will see production capacity raised to 650,000 b/d, with ten trains in operation and one spare.

In January, Lukoil signed an amended agreement with the Oil Ministry to reduce its plateau oil production target to 1.2 million b/d, from the original 1.8 million b/d signed in 2010.

West Qurna 2 is operated by state-owned South Oil Company and a consortium of contractors including Lukoil (75 per cent) and state-run North Oil Company (25 per cent).