2 Nov 2023 18:52

Lukoil signs supplementary agreement on West Qurna-2 project in Iraq that envisages improved terms and conditions

MOSCOW. Nov 2 (Interfax) - Lukoil has signed a supplementary agreement with Basra Oil Company regarding the contract to develop and produce oil at the West Qurna-2 field in Iraq, the Russian oil company said in a statement.

The supplementary agreement envisages improved terms and conditions and a 10-year extension of the service contract until 2045; investments for further project development; and gradual doubling of the field's capacity to reach a production plateau of 800,000 barrels of oil per day, it said.

"This will result in an increase in the economic efficiency of the West Qurna-2 project," it said.

The field development plan provides for bringing new multi-well pads into production, commissioning oil treatment facilities and complex gas treatment facilities for the Yamama formation, building export pipelines and water flooding units, and expanding the tank battery, it said.

"The conclusion of the Supplementary Agreement is a next step in the long-term strategic partnership between Lukoil and the Ministry of Oil of Iraq, as well as confirms the parties' commitment to continue their joint work on the development of the energy sector of the country," Lukoil said.

Iraqi Oil Minister Hayyan Abdul Ghani said recently that the current production at the site reached about 500,000 barrels a day.

West Qurna-2 is being developed on the basis of a service contract signed by Lukoil in January 2010. Iraq's state North Oil Company owns 25% of the project. The contract's initial term was 25 years. The first oil was produced at the project in March 2014.

It is one of the largest fields in the world, with initial recoverable reserves of about 14 billion barrels.

Lukoil is completely financing the costs of the whole project. Following the compensation of historical losses, Lukoil has started obtaining compensation of all the costs as a share in oil production. In addition, Lukoil receives remuneration in proportion to its 75% interest of $1.15 payable to project parties for each barrel of oil and pays profit tax. The Russian company has negotiated for years to make the project more economically efficient through increasing the service payment to the investor.