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Oil Company "LUKOIL"

March 25, 1997

Russian firms sign $3.8-bln deal on Iraqi oil field

Russia's LUKOIL, Zarubezhneft, Mashinoimport and Iran's SCOP March 21 in Baghdad signed a $3.8-billion deal with Iraq's Ministry of Oil on the second stage of developing Western Qurna oil field, one of the world's biggest.

LUKOIL will have 52.% of the production-sharing contract, SCOP kept 25% and Zarubezhneft, known in the West as Nestro, and Mashinoimport have 11.25% each.

Western Qurna-2 has reserves of around 6 billion tonnes. Output during the contract's 23-year term should total 667.3 million tonnes. The deal may be extended for five years. Capital investments in the field are forecast at around $4 billion. Stable production of 33 million tonnes should be achieved in the seventh year of operations and last 10 years.

Western Qurna lies in southern Iraq and is a continuation of the northern part of Rumeil field, which was discovered in 1953. A total 40 exploratory wells have been sunk at the field. Its reserves were evaluated in 1979 and a technological plan to develop the oil-bearing horizon was compiled. Soviet specialists sank 300 production and injection wells, built transport, production and water-pumping infrastructure at Northern Rumeil and southern Western Qurna. Work was stopped due to military action in southern Iraq.

The Western Qurna-2 development will begin immediately after the United Nations lifts sanctions against Iraq. The companies will make preparations that do not violate sanctions. They will:

- make engineering and geological surveys, a technical development plan, cost estimates for the first section, build a settlement for personnel and interpret geological data;

- ready tender documentation to buy equipment and materials and place orders;

- carry out general construction with Iraqi state companies and local subcontractors using local resources and buying abroad property, equipment and materials permitted to be exported to Iraq;

- send specialists to observe the work and carry out other activity not breaking U.N. sanctions.

LUKOIL President Vahit Alekperov said the contract is one of LUKOIL's biggest and most effective. "This event opens a new page in the history of cooperation between Russian and Iraqi oil companies. It is only the first step in Russian companies' return to Iraq. I think that the future holds mutually profitable projects in oil production in this country for us," he said.

The signing of Western Qurna-2 contract shows that Russia, the successor to the Soviet Union, is ready to continue to work with Iraq in hydrocarbons production. This cooperation will also help return Iraq to the world community after U.N. sanctions are lifted.



Press Centre  OAO "LUKOIL"
phone.: (095)927-1677,  fax: (095)927-1653,




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