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Russia
pushing for more Iraq oil deals before war
Reuters, 02.21.03,
7:00 AM ET
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By Dmitry Zhdannikov
MOSCOW, Feb 21 (Reuters) - Russia is planning a
last-minute push to clinch new oilfield contracts with Iraq in the final
weeks before any U.S.-led war against Baghdad, oil industry sources said on
Friday.
Russian Energy Minister Igor Yusufov is planning a
secret visit to Iraq in the next few days to urge Baghdad to award a Russian
company the contract to develop West Qurna, one of Iraq's biggest oil prospects, the sources said.
He also hopes to secure rights for smaller fields
after Moscow
met with fresh success in getting new deals in January.
Industry experts have said Russian oil companies are
likely to invoke international law to protect their oilfield contracts in
the event of a change in the government of Iraq.
Russian companies have the most to lose in Iraq
should any new government seek investment from leading U.S., French and
British oil majors to develop crude reserves that rank second in the world
in size to Saudi Arabia's.
Russia's LUKOIL <LKOH.RTS> held rights to West
Qurna until it was cancelled by Baghdad in December, apparently because
LUKOIL had approached the Iraqi opposition to protect its position should
war topple President Saddam Hussein.
A spokesman for the Russian Energy Ministry declined
to confirm Yusofov's trip.
But another source told Reuters: "Of course, Iraq will be the key
destination."
"He could try to bring a new Russian firm for
Qurna. Otherwise Moscow could lose the field altogether in a few weeks," the
source said, referring to the possible U.S. invasion of Iraq.
Another said: "He could try to negotiate other
deals, including new smaller fields."
The $3.7 billion West
Qurna deal was held by LUKOIL between 1997
and mid-December 2002 when Baghdad suddenly cancelled it, saying the company had failed to
meet the terms of the deal by not starting development work. Gulf War U.N.
sanctions outlaw any investment in Iraq.
LUKOIL said Iraq was trying to punish Russia for supporting a U.N. resolution to disarm Iraq. But industry sources
said Baghdad
may have decided to scrap the deal after discovering that LUKOIL was
seeking guarantees for the deal from the Iraqi opposition in a post-Saddam Iraq.
Iraqi officials said in January that Baghdad still planned to
give Russian firms priority in signing other new contracts but Baghdad has yet to
reassign West Qurna.
In January, Baghdad awarded a contract to small Russian firm Soyuzneftegaz
for the 200,000-barrel-a-day Rafidain field in southern Iraq and with medium-sized
oil producer Tatneft <TATN.RTS> for block nine in the Western Desert.
Iraq has also
started negotiations with Zarubezhneft, Russia's umbrella company for state holdings abroad, on the
giant Bin Umar oilfield that was previously earmarked for France's TotalFinaElf
<TOTF.PA>.
The French company also has high hopes for another
big field, Majnoon, but has been careful not to sign contracts while
sanctions remain in place.
The Gulf Russian mission this weekend is also due to
take Yusufov to the United Arab Emirates, Oman and Bahrain although a Russian Energy Ministry spokesman declined to
confirm any part of the trip.
Yusufov is expected to hold talks with OPEC producer
UAE and non-OPEC Oman over the stability of world oil markets.
Copyright 2003, Reuters News Service
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