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Russia's Lukoil confirms plans to increase oil production at Iraq's West Qurna-2 field

March 23, 2015, 19:22 UTC+3 MOSCOW

The company's president discussed the progress of the West Quarna-2 field development project and its future prospects with Iraqi Prime Minister Haider al-Abadi and Oil Minister Adil Abdul-Mahdi

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MOSCOW, March 23. /TASS/. Lukoil confirms its plans to increase oil production in the West Qurna-2 Iraqi oil field, according to the company’s official statement on the results of its President Vagit Alekperov visit to Baghdad.

"The company, as before, follows plans of a long-term development plans for business in Iraq and increasing oil production", Alekperov said after the meeting with Iraqi Prime Minister Haider al-Abadi and Oil Minister Adil Abdul-Mahdi.

The parties discussed the progress of the West Quarna-2 field development project and its future prospects.

Al-Abadi confirmed that the authorities are willing to continue providing full support for joint projects.

Before his visit, Alekperov said that Lukoil was going to ask Iraq to increase the volume of oil compensation. Otherwise, Lukoil would be forced to reduce the amount of investment.

"We hope that the Iraqi side will take all possible steps in this difficult situation, in order to increase the transfer of our cost oil, with one purpose, so that we would be able to keep the pace of investments that already have been planned. If they do not, then we will of course reduce investment, and delay working on certain issues pertaining to gas utilization and others, which are directly connected with the production volume," Alekperov said.

It was reported previously, that the Iraqi Oil Ministry invited foreign oil companies, including Russian Lukoil and Gazprom Neft, to negotiate the revision of the service contracts. It is impossible to fulfill the obligations on reimbursement to mining companies, working in Iraq, due to the significant drop in oil prices since mid-2014. The price of Iraqi oil now accounts for less than $60 per barrel. Negotiations with the companies could lead to delaying Iraqi plans to increase oil production indefinitely. Currently Iraqi production totals 4 mln barrels per day, and by 2017 it has to exceed 12 mln barrels per day. However, the number may be reduced to 9 mln barrels per day by 2020.

Infographics Oil prices over 30 years

Oil prices over 30 years

Year-average inflation-adjusted oil price. Infographics by TASS

Lukoil will compensate the entity incurs costs for the development of the West Qurna-2 from the oil sales, and oil export with the permission of the Iraqi government. In 2014, 19 tankers were sent, and now, the production at the field is 380 thousand barrels per day.

Lukoil's cost recovery for the West Qurna 2 project in 2014 was $3.62 billion dollars. Lukoil began mining for oil at the West-Qurna-2 Iraqi oil field in March of 2014. LUKOIL has acquired the right to participate in the development of the field on December 12, 2009 as part of a consortium with Norway's Statoil, a Norwegian company, which later withdrew from the project. The recoverable reserves at the field are estimated at 13 billion barrels. West Qurna-2 is a field in southern Iraq, 65 km north-west of the large port city of Basra. The field was discovered in 1973, the area of the project site is over 300 sq km.

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