1 Feb 2010 11:56

Lukoil inks oil services contract with Iraq

BAGDAD. Feb 1 (Interfax) - President of Russia oil giant Lukoil Vagit Alekperov was in Bagdad Sunday, where he signed a contract for Lukoil to provide services in development and oil extraction at the West Qurna-2 deposits.

"Today is a remarkable day, we begin our project," Alekperov said, as reported by an Interfax correspondent.

The rules of the competition for developing West Qurna-2 were transparent, strict, and open, Alekperov said. "We are technologically ready to begin the project and are counting on the assistance of our colleagues," he said. He assured Iraqi Oil Minister Hussein al-Shahristani that all terms of the contract will be fulfilled.

Lukoil had been working on this project for ten years, Alekperov said. "We never stopped working on the project in all these years." West Qurna-2 might be compared with Russian deposits such as Samotlorskoye, he said.

The company estimates that investment in West Qurna-2 could be $30 billion, of which $20 billion will go directly into production.

Iraq is pleased to welcome Lukoil, al-Shahristani said. "We are glad to welcome Lukoil back to Iraq. We will make every effort to ensure the security of the company's workers."

Drilling at the deposits will begin in 2011 and actual extraction in late 2012, according to Lukoil plans. Reaching target production of over 90 million tonnes of oil annually is figured for 2017.

Plans for developing the deposits include additional seismic work and drilling more than 500 wells. Lukoil investments in West Qurna-2 will come to around $300 million in 2010, with $4.5 billion over the coming four to five years.

Lying 65km northwest of the city of Basra, West Qurna-2 has recoverable reserves of roughly 13 billion barrels, and was opened in 1973.