Lukoil inks co-op deal with Basra cities

Cooperation: Lukoil signs deal with local municipalities

Lukoil has signed co-operation agreements with three cities in Iraq's Basra province that will help Russia's second biggest oil producer tap the vast reserves of the West Qurna 2 field.

The company inked agreements with the municipalities of Madeina, Al-Qurna and Izz Al-Din Salim, which sit atop the lucrative oilfield.

The agreements will facilitate the "expansion of economic relations" between the cities and Lukoil. They will co-operate in protecting the environment and in the "rational use of natural resources".

They will also work to improve living standards for local communities, in part by encouraging contractors to employ local workers to help develop the West Qurna 2 project.

Lukoil also agreed to finance construction, improvement and upgrade of several health, sports and educational facilities in 2013.

In 2009, Iraq awarded a team headed by Lukoil rights to develop Block 10 about 70 kilometres north-west of Basra. The field is thought to hold recoverable reserves of about 13 billion barrels.

Australian services outfit WorleyParsons has been awarded a three-year contract to provide personnel to support engineering, procurement and construction activities at West Qurna 2.

Lukoil is hoping to produce 150,000 barrels per day of oil from West Qurna 2 by the end of 2013, rising to 500,000 bpd in 2014.

The Russian giant operates the field with a 75% interest and is partnered by Iraq’s state-owned North Oil Company on 25%.

Earlier this year, Norwegian giant Statoil sold its 18.75% stake in the $25 billion development to Lukoil as it failed to meet the company’s profitability criteria.

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