31 Jan 2010 14:46

Lukoil signs contract to develop oil field in Iraq

BAGHDAD. Jan 31 (Interfax) - Lukoil President Vagit Alekperov signed a contract in Baghdad on Sunday to develop the West Qurna Phase 2 oil field, an Interfax correspondent has reported.

Lukoil is to start drilling in 2011, to extract first crude in late 2012 and to bring the annual extraction volume to the target level of over 90 million tonnes in 2017. The company plans to conduct an additional seismic survey and to drill more than 500 wells. Lukoil's investment in West Qurna-2 is estimated at about $300 million for 2010, and at some $4.5 billion for the coming four-five years.

In December 2009, a consortium comprised of Lukoil and Norway's Statoil won a tender to develop West Qurna-2, earlier reports said.

The remuneration fee is $1.15 per barrel with a production level of 1.8 million barrels per day. The contract has been ratified by the Iraqi Cabinet. It is intended for 20 years and can be extended for another five years. Lukoil and Statoil's stakes in the contract are, respectively, 56.25% and 18.75%, and an Iraqi state company holds a 25% stake.

The southern Iraqi oil field has a recoverable oil reserve of about 13 billion barrels. It was discovered 65 kilometers northwest of Basra in 1973.