Russian firms interested in Iraqi oil

Not everyone wants to exclude Iraq from the global economy. Russia's ambitious oil companies -- and to an extent the Moscow government -- would love to see Iraq exporting freely again. Russian firms already control more than one-third of Iraqi oil production, and are hungry for a larger share.
And while some of Russia's friends and partners in the West agitate for an escalation of hostilities against Baghdad, Moscow's thirst for oil riches puts it in a tricky position.

Russia's biggest oil firm, LUKoil, was the first foreign company to sign a contract with Baghdad after the Gulf War. The West Khurna oilfield project, in which LUKoil has a 68 % stake, is thought to be one of the largest in Iraq, but its development is banned under international sanctions. Tatneft, based in the Russian region of Tatarstan, helps Iraq to explore for and produce oil under the United Nations oil-for-food programme.
Slavneft, a smaller Russian company, has also been active in Iraq, but has retreated from several projects there in recent months. Spying opportunities in the development of the oil sector, a bunch of other Russian companies sell Iraq machinery, spare parts and vehicles, and a recent estimate puts Russian contracts with Iraq at $ 4 bn over the past 10 years.

The benefits flow both ways. Not exactly surrounded by wealthy friends, Baghdad relies on Russian technology to keep its creaking industry in shape. And it is now trying to trade contracts for political support.
Earlier this year, in an attempt to persuade Russia to pull out unilaterally from the UN sanctions regime, Baghdad started threatening to cancel the Khurna project. Now that international tension is reaching its peak, the question is which way Russia will jump.

Baghdad is leaning on Russian contractors, pointing out that Chinese and French companies have also expressed interest in Iraqi opportunities. Iraq recently signed a co-operation programme with Russia worth a notional $ 40 bn, and still owes Moscow some $ 8 bn from thedays of the Soviet Union.
If Saddam Hussein were unseated, Russia's chances of getting its hands on any of that money, or of retaining its privileged access to the market, would be slim. So will this sway President Vladimir Putin? Probably not.

Russian oil firms, which used to operate more or less as the Kremlin's commercial arm, have lost influence rapidly in the Putin era. The process of privatisation and fragmentation of the industry, which plodded on throughout the 1990s, has reached its zenith over the past couple of years.
Companies like LUKoil are now richer and more successful than they have ever been; at the same time, they are far less political. Mr Putin, for all his nationalistic sentiment, is keen to be seen as a friend -- if not ally -- of the West. He is unlikely to sacrifice that to satisfy his commercial cronies.