09.11.2007, 16:31
LUKOIL Is Put Out from Western Kurna-2 Project in Iraq
OREANDA-NEWS. As reported, Iraq's minister of oil, H. Ash-Shakhristani announced on November 7 the termination of contract on development of Western Kurna-2 project, thus dismissing Russia's oil & gas company LUKOIL. New tender is set to find a new operator of the project will be conducted in 2008. Russian party finds the old contract still in force and will demand its implementation, possibly using political tools as high as the RF government's influence. To remind, the confirmed reserves of Western Kurna-2 oil field (a part of Rumeil enterprise) are estimated at 6 bn barrels of oil. Share of LUKOIL, according to agreement of production split, forms 68.5%, though, 17.5% will be transferred to ConocoPhillips to share risks and investment load, which is estimated in at least 6 bn USD. After some analysis of the said report, Veles Capital experts say that it will negatively affect LUKOIL and its shares, as the company already spent money to get a license for the field and invested into the first part of the project. However, the experts surmise that with the support of its partner - ConocoPhillips, the Russian company will be able to win this tender again or gain its rights back by successfully appealing to Iraq's government, possibly offering some beneficial scenario of cooperation, as a consequence, taking the asset back in its hands. But, in any case, LUKOIL is likely to secure its investment by getting ConocoPhillips as the former's partner, the analysts suggest.
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