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Iraq, Russia to continue talks on Saddam-era deals

BAGHDAD (Reuters) - Iraqi and Russian officials are continuing talks about Moscow’s desires to revive Saddam Hussein-era deals in Iraq’s lucrative oil sector, a senior Russian official said on Monday during a visit to Baghdad.

Energy Minister Sergei Shmatko met with Prime Minister Nuri al-Maliki, Oil Minister Hussain al-Shahristani, and Electricity Minister Karim Waheed on a trip centering around economic ties.

“Today it has been agreed between the Iraqi Oil Ministry and LUKOIL to hold further dialogue regarding contracting conditions based on Iraqi conditions,” Shmatko said when asked about talks with Shahristani about the possibility of reviving Russian-Iraqi deals predating the U.S.-led ouster of Saddam in 2003.

During Iraqi Prime Minister Nuri al-Maliki’s visit to Russia in April, both countries agreed to work on restoring Saddam-era oil contracts. Iraq had previously said Russian firms would have to compete against global rivals for such deals.

A Russian consortium including oil group LUKOIL signed a $3.7 billion deal to develop Iraq’s West Qurna field in 1996. But Saddam tore up the LUKOIL deal in 2002, months before the U.S.-led invasion, saying the group had failed to live up to its end of the deal.

Russia has since been lobbying for the contract to be honored by the current Iraqi government.

Russian firms are also taking part in two bidding rounds Iraq is holding for long-term contracts to develop major oil and gas fields. The first bidding round culminated in an auction in Baghdad in June, and a second will take place in December.

Speaking through an interpreter after meeting with Waheed, Shmatko said Russian companies were interested in West Qurna Phase 2, with estimated reserves of 12.9 billion barrels.

“Some Russian companies have already worked in Iraqi oilfields and signed deals to work in those fields. The Iraqi oil minister has suggested to Russian firms that want to continue those projects that they must take part in the second bidding round,” Shmatko said.

LUKOIL and ConocoPhillips placed a bid for a contract for West Qurna Phase 1 in Iraq’s June auction, but it did not walk away with that contract.