China and Russia search for oil in southern Iraq

Sep 30, 1998 02:00 AM

China's National Petroleum Corp. has begun surveying its concession in southern Iraq for oil. It was unclear if the activity violates UN sanctions, which ban most trade and financial dealings with Baghdad.
An Iraqi officials said the state-owned Chinese company had begun work under an agreement it signed with Baghdad in June 1997 for development of the Al-Ahdab field.
China is 1 of the 5 permanent members of the UN Security Council and has long opposed the continuation of UN sanctions on Iraq.
The sanctions, imposed after Iraq's 1990 invasion of Kuwait, limit the sale of oil, ban air travel and bar most financial transactions.

CNPC has rights to the Al-Ahdab field, expected to yield a bn barrels of oil, in Kut province, which is 170 km (l05 miles) south of Baghdad.
Joint Chinese-Iraqi teams of engineers were conducting surveys at Al-Ahdab.
Karim Ahmad, a senior Iraqi oil official said: "exploration has been going on for about 2 months."
The Oil Ministry officials confirmed reports that China and Iraq have set up a joint company to drill at Al-Ahdab.
They said the Chinese company was working through an Iraqi firm, the General Company for Oil Explorations, which has been digging exploratory wells.
The officials said the Chinese contractor already has supplied a detailed plan for development of Al-Ahdab and that the Iraqi side has accepted it.
China also is obligated by the $ 1 bn pact to gather the geological and seismic information needed to start production.

Iraq has the world's second largest reserves of oil after Saudi Arabia.

Russia, another permanent member of the Security Council, also has signed an oil development deal with Iraq.
Work by a Russian consortium led by Lukoil s inching ahead in its concession of West Qurna, which is 200 km (120 miles) south of Kut.
The consortium was encountering not only sanctions-induced problems but also financial difficulties as a result of Russia's economic crisis.
Lukoil has been able to carry outa limited amount of work on the ground in Iraq in the deal, which was structured so it would not violate UN sanctions by delaying actual development work.
Russia's $ 3.5 bn contract was signed in March 1997 and calls for the development of up to 8 bn barrels of proven reserves over a 23-year period.
Plans call for production of 100,000 bpd of crude by March 2000.

Source: not available
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