Russia to Defend Post-War Iraq Oil Interests

March 27, 2003

MOSCOW - Russia on Thursday moved to defend its oil interests in Iraq, saying it would insist that Russian oil company contracts with Baghdad be honoured after the U.S.-led war to overthrow the government of Saddam Hussein.

Energy Minister Igor Yusufov said Russian oil companies should be involved in the reconstruction of Iraq's oil infrastructure as soon as the war was over.

"We are currently working on the immediate return of Russian firms, which have interests in Iraq, to the country as soon as peace is restored," Yusufov told local news agencies.
His comments came after some Russian oil bosses said they were sceptical about the prospects of keeping multi-billion dollar deals in a post-Saddam Iraq, especially after the United States began this week to hire its firms to rebuild the Iraqi oil industry.

"They should return to their projects, evaluate the situation with the equipment left and start working," Yusufov said of Russian firms.

Nikolai Tokarev, the head of Russian state oil firm Zarubezhneft, which has big interests in Iraq, told Reuters this week he saw no prospects for Russian firms in post-war Iraq as the United States would squeeze its rivals out of the region.

He also said he was sceptical about the prospects of using international law to keep existing deals under a government that might replace Iraqi President Saddam Hussein's.

U.S. oil services firms, including a subsidiary of Halliburton Inc, formerly headed by Vice President Dick Cheney, this week was awarded U.S. government contracts to assess and extinguish oil well fires in Iraq and supply well control services.

Halliburton, the world's second largest oilfield services firm, has a long history of involvement in military logistical support for the U.S. government.

But the biggest deals will be for the development of several giant fields that make Iraqi oil reserves second only in size to to Saudi Arabia's.

BIG CONTRACTS
Russian firms have signed contracts worth $4 billion with Saddam's government to drill oil wells, deliver equipment and develop Iraq's massive oil reserves.

The key deal is a $3.7 billion contract held for years by Russian oil giant LUKOIL, smaller Zarubezhneft and Mashinnoimport to develop a huge West Qurna field.

Iraq scrapped the contract last year saying LUKOIL was seeking U.S. guarantees to keep the field under any government change. Baghdad said it was likely to leave the contract in Russian hands, with Zarubezhneft as a possible operator.

In January, Baghdad awarded a contract to Russia's oil and gas construction company Stroitransgaz to develop block four in Iraq's Western Desert.

It also initialled contracts with Soyuzneftegaz, a small company, for the 100,000-barrel-a-day Rafidain field in southern Iraq and with medium-sized oil producer Tatneft for block nine in the Western Desert.

It also started negotiations with Zarubezhneft on the giant Bin Umar field - news which came as a shock to French oil major TotalFinaElf which has long been earmarked for the $3.4 billion development.

Russian firms also have contracts worth tens of millions of dollars to supply equipment to Iraq, including for power generation plants, agriculture, and transportation.

Oil deals under the UN oil-for-food programme include Zarubezhneft's contract to drill 45 wells and Tatneft's contracts to drill 33 wells on the Kirkuk field. Mashinnoimport has a $75-million contract to drill 90 wells.

http://www.russiajournal.ru/news/cnews-article.shtml?nd=36361