UPDATE 1-Statoil says W. Qurna deal will be profitable

(Adds Lukoil comment)

BAGHDAD Dec 12 (Reuters) - Statoil (STL.OL) and Russian partner Lukoil (LKOH.MM) (STL.OL) will make money out of Iraq's supergiant West Qurna Phase Two oilfield project even with the low fee they agreed, a Statoil executive said Saturday.

The partners accepted a remuneration fee of $1.15 per barrel to develop the field, the lowest agreed in two bidding rounds Iraq has held this year for some of its biggest oilfields.

Statoil and Lukoil pledged to boost output to a plateau target of 1.8 million barrels per day. West Qurna Phase Two has estimated reserves of 12.9 billion barrels of oil.

Strip out a 25 percent share of profit that goes to the Iraqi state oil company involved and 35 percent corporate tax on net income, and the profit margin is ultra thin.

"We've carefully looked at them (the numbers) and what we've decided to go for is a project that will be profitable for us," said Torgeir Kydland, Statoil's senior vice president for international exploration and production in the Middle East.

"We're happy to win, to get the position in Iraq is important to the company. We now have a position in one of the largest fields in the world and in one of the most prolific oil provinces in the world."

Kydland said the companies would work together with Exxon Mobil (XOM.N) and Royal Dutch Shell (RDSa.L), which have inked an initial deal for the 8.7-billion-barrel West Qurna Phase One oilfield project.

"It's in the interest of both consortia to work together to develop the field in the best way," he said.

Lukoil Overseas President Andrey Kuzyaev said the Russian company had been trying to get West Qurna Phase Two since 1997.

"We are happy. We have a long way (to go)," he said, adding that work on the project will begin next year.

Lukoil had lobbied since the U.S. invasion in 2003 to revive a contract agreed with the administration of ousted dictator Saddam Hussein. (Reporting by Missy Ryan and Simon Webb; Editing by Michael Christie and Victoria Main)