Lukoil Operations in Iraq

= History =

Lukoil was granted the rights to develop oilfields in 1997 by Saddam Hussein. The company held a 68.5% share in the consortium, a project which was then cancelled by Hussein's regime after Lukoil refused to violate UN sanctions against Iraq by drilling. . Lukoil had been trying to revive the deal since 2003 after Moscow wrote off most of Iraq's $12.9 billion in debts and in April 2009 Lukoil’s CEO unsuccessfully lobbied Iraqi Prime Minister Nouri al-Maliki to reinstate the contract from the Hussein era.

= Activities and Contracts =

West Qurna 2
After unsuccessfully bidding for the first phase of the West Qurna project, Lukoil and partner Statoil won rights in 2009 to develop the second phase of Iraq’s “super giant” West Qurna crude deposit, the largest offered to foreign investors in the second round of bidding in Iraq. The consortium offered to develop the field in exchange for $1.15 for each barrel of oil it extracted, outdoing bids from companies including BP and Total. Under the terms of the contract, Statoil would hold an 18.75% stake in the consortium, with Lukoil holding 56.25% and the Iraqi state's North Oil Company holding the remaining 25%. Lukoil announced in 2010 that they planned to invest $4.5 billion at West Qurna 2 over the following 4-5 years and $300 million over 2010. .

In November 2012 Lukoil CEO Vagit Alekperov suggested that Lukoil may look to "wade deeper into Iraq" by expanding through participation in the West Qurna-1 field. UPI reported that officials in Baghdad considered bringing Lukoil into the project to potentially replace ExxonMobil, which angered the central government by signing deals directly with the semi-autonomous Kurdistan Regional Government (KRG).

Reuters reported in November 2012 that Lukoil put its relationship with the central government at risk with its Geneva-based trading arm Litasco bought oil from Kurdistan, in defiance of Baghdad. An official from Iraqi state oil marketer SOMO dismissed the claims.

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