LUKoil to invest nearly $ 2 bn in Iraq
Russian oil company LUKoil plans to invest around $ 2 bn in Iraq this year, corporate newspaper for LUKoil Overseas, the group's international upstream operator, said recently.
The main projects for 2012 include production and exploration drilling (126,000 and 14,000 meters, respectively), design and survey work, the start of construction of a pipeline to the Tuba terminal, and involvement in the construction of shared facilities for sea-water supply. The company also plans to sign the necessary contracts for these projects.
According to the publication, during recent negotiations between Russian Special Presidential Envoy to the Middle East and Deputy Minister of Foreign Affairs Mikhail Bogdanov, Iraqi Prime Minister Nouri Al-Maliki and Oil Minister Abdul Karim al-Luaibi, in which LUKoil chief Vagit Alekperov also took part, a decision took place regarding actual options for boosting the project's economic efficiency.
It was earlier reported that LUKoil's capex for Iraq in 2011 came to $ 203 mm, up from $ 172 mm in the previous year. LUKoil completed demining operations at production sections, launched a Pilot Camp workers settlement housing 172 people, prepared contracts for the drilling of 23 production wells, built a gas-turbine electrical plant and a storage plant at the Tuba terminal.
In January 2010, LUKoil signed a contract for development and production at the West Qurna 2 field in southern Iraq. The contract's signees are Iraqi state-owned South Oil Company and a consortium of contractors consisting of Iraqi state-owned North Oil Company, LUKoil and Norway's Statoil. LUKoil has a 56.25 % stake in the project. West Qurna 2 has recoverable oil reserves of around 12.9 bn barrels.
Operation at West Qurna 2 is set to be launched by the beginning of 2014. Oil production was originally supposed to begin at the end of this year, but LUKoil later postponed it to the beginning of 2013.
In 2017, West Qurna 2 oil production will total 1.7 mm barrels, or 94 mm tons. LUKoil estimates that it will invest roughly $ 4.5 bn in the project over the next three years, and $ 27 bn as a whole. It is assumed that the Russian oil company will be able to place around 10 mm tons of oil from West Qurna 2 on its balance sheet. Iraq is one of LUKoil's future points for growth.
Recently, LUKoil's partner in the West Qurna 2 project, Statoil, informed the Russian company of its possible withdrawal from the project, in which the Norwegian company owns a 25 % stake.