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Lukoil sees oil exports from West Qurna-2

Moscow, October 2, 2013

Russia's No.2 oil producer Lukoil plans to reach commercial levels of oil production at Iraq's huge West Qurna-2 oilfield in the first quarter of 2014 and expects smooth exports from the deposit, a company official said.

Andrei Kuzyayev, head of Lukoil's overseas operations, also confirmed at Reuters Russia Investment Summit this week that Lukoil was interested in participating in the Kirkuk oilfield in northern Iraq and in offshore tenders by Norway.

Lukoil, which is not state-owned, is looking for expansion overseas as Russia becomes increasingly dominated by state-controlled Rosneft, which has been expanding fast since acquiring oil producer TNK-BP earlier this year.

Lukoil's foreign upstream projects account for 6 percent of the company's oil output. It expects the figure to rise to 17 percent by 2020 in its total hydrocarbon production.

Kuzyayev said Lukoil would vie in another licensing round for offshore exploration off Norway in 2014, where it has already acquired rights to drill in the icy Arctic waters.

West Qurna-2, the world's second-largest undeveloped field with recoverable oil reserves of around 14 billion barrels, is crucial for Iraq's economy.

An oil revival in Iraq after decades of sanctions and wars has slowed this year because of infrastructure and security problems. Unless momentum is regained in the autumn, Iraq could suffer its first annual drop in output for three years.

NO RISKS

"There are no infrastructure risks for today. We have a firm assurance from Iraq's South Oil Company that they will receive all our oil," Kuzyayev said this week.

"To minimise this risk, we are building three reservoirs of 66,000 cubic metres each in Tuba and a 102-kilometre pipeline to Tuba with capacity of 700,000 barrels per day."

He said Lukoil would start producing West-Qurna's first commercial volumes of oil, above 120,000 barrels per day (bpd), in the first quarter of 2014, when production for the year will stand at over 5 million tonnes (more than 100,000 bpd).

He reiterated that the field would produce 1.2 million bpd at its peak, but the plans were yet to be finalised with the Iraq government.

Lukoil controls 75 percent of the West Qurna-2 oilfield and has been looking for a partner to replace Statoil, which decided to leave the project last year.

Kuzyayev said talks were under way with several partners but the company was "focused on the project implementation" and a need for a partner "is not as acute as it was last year."

He said the company was also eyeing other projects in Iraq, including Kirkuk.

"Obviously, we are looking at different options, including Kirkuk and Nasiriya and new exploration projects in Iraq... There are no talks on Nasiriya and on Kirkuk, we are just interested in it (Kirkuk), no more."

Industry sources had told Reuters Lukoil had its sights set on Kirkuk, which straddles the border with the autonomous Kurdish region and is a flashpoint in relations between the two sides.

Oil major BP already has an initial agreement with Baghdad to revive the giant but ageing Kirkuk oilfield which is suffering massive output declines. – Reuters




Tags: Iraq | Oil Exports | Lukoil |

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