30-09-99 Iraq and Russia have agreed to further expand trade under the U.N.-approved oil-for-food program but failed to find a common ground on how to activate an oil development deal they signed in 1997. Visiting Russian Energy Minister Viktor Kaluzhny and his Iraqi counterpart Amer Mohammed Rashid held a third round of negotiations.
Russian officials said Rashid warned his Russian guest that LUKoil may lose its contract to develop about 10 bn barrels of reserves in the southern West Qurna oil field if it does not start work promptly. The officials, speaking on condition of anonymity, said Kaluzhny, while stressing Russia's continued interest in West Qurna, made it clear to Rashid that Moscow is in no position to flout UN trade sanctions which ban foreign investments in Iraq.

West Qurna is one of the largest undeveloped oil fields in the world with total proven reserves of more than 20 bn barrels. Under the contract, Russia holds a nearly 25-year stake in half of West Qurna's reserves. Iraq had alsopledged to offer Russia the remaining 10 bn barrels if it started work despite the UN trade sanctions imposed for its 1990 invasion of Kuwait.
The contract calls for LUKoil, which is Russia's largest oil company, and partners Zarubezhneft and Mashinoimport to spend $ 200 mm to develop the field. Russian officials said Kaluzhny told Rashid that the Russian firms did not have ready cash to start work and that Western creditors would not give them loans as long as UN sanctions remained in place.
But he assured Rashid that Russia will do what it can to persuade the UN Security Council to allow foreign investment in Iraq, particularly in the oil sector. Full-scale development of West Qurna by Russian firms is expected to cost more than $ 2.5 bn.