BAGHDAD/OSLO (Reuters) - A group led by Russian energy firm Lukoil signed an initial deal on Tuesday to develop Iraq’s West Qurna Phase Two oilfield, as its partner in the venture Statoil said it had increased its stake.
Iraq awarded 10 oilfield development contracts to global oil firms in two energy auctions this year. If they come to fruition, the deals could more than quadruple Iraqi oil output capacity to about 12 million barrels per day.
Such output would rival global top producer Saudi Arabia.
The supergiant West Qurna Phase Two oilfield in southern Iraq has estimated reserves of 12.9 billion barrels of oil, and is one of the country’s most prized oilfields.
Statoil said it had raised its stake in the two companies’ venture to 25 percent from 15 percent, leaving Lukoil with the rest. The change will not entail any compensation payment, the firm said.
“The increased Statoil share will create a more balanced consortium and confirms Statoil’s confidence in this being an important position for the company,” it said on its website.
Lukoil had earlier unsuccessfully attempted to persuade Iraq to bypass the contract auction for the oilfield, and resurrect an old Saddam Hussein-era deal for the field.
The Russian firm has said it would invest “billions of dollars” in the project.
The consortium clinched the 20-year service contract with a proposed remuneration fee of $1.15 a barrel and eventual output of 1.8 million barrels a day, a target roughly equal to the entire output of Lukoil’s fields in Russia.
Analysts say the terms for Iraq’s oil deals are tight, but could give oil firms better access to as yet undeveloped reserves and other oil deals in future.
“We consider this contract a major step toward developing our joint activities in Iraq,” Dmitry Timoshenko, vice president of strategy and business development at Lukoil, told reporters in Baghdad, speaking through an Arabic translator.
The initial deal will have to be approved by Iraq’s cabinet before a final contract can be signed.
Deputy Oil Minister Abdul-Karim Louaibi said seven oil deals awarded in a contract auction early this month would be sent to the cabinet on Thursday.
Reporting by Ahmed Rasheed; writing by Mohammed Abbas; editing by James Jukwey