By Yulia Ashcheulova
Russia’s LUKOIL is set to become the only foreign operator of the West Qurna-2 oil project in Iraq after its partner, the Norwegian Statoil Company, has expressed readiness to cede its share in the consortium to Russia.
The Iraqi Oil Ministry has endorsed the deal. After the contract is signed, LUKOIL will have a 75% stake in the West Qurna Field. The remaining 25% belongs to the Iraqi Oil Company. The volume of the oil reserves is estimated at 13 billion barrels. The pay for each produced barrel will amount to over one dollar. Given that LUKOIL will get a fixed sum for developing West Qurna-2, the company’s revenues will not be affected by fluctuations in global oil prices.
Since the details of the deal have not been disclosed, it’s hard to predict how successful it could be. Expert Denis Borisov had this to say in an interview with a Voice of Russia correspondent.
“It’s too premature to assess the deal. We need more information as to whether LUKOIL paid for Statoil’s share or Statoil just gave up. LUKOIL managers have a positive vision concerning the development of West Qurna-2. It’s no wonder then that they resolved to boost LUKOIL’s share in the project.”
The development of the West Qurna oil field may become lucrative for LUKOIL. Russia’s oil market analyst Vitaly Mikhalchuk comments.
“West Qurna is a fairly promising project, both in terms of reserves and concerning prospects for development. It could fetch hefty oil injections into LUKOIL.”
According to the International Atomic Energy Agency, Iraq will account for a significant share of the oil output growth over a period until 2035. This makes the development of the country’s oil industry of particular importance for international oil markets. West Qurna-2 is one of the world’s largest oil deposits. LUKOIL and Statoil won a tender for its development in 2009 beating the Petronas Constortium which included the British BP, Chinese CNPC and French Total.