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. Last Updated: 07/27/2016

Zangas Plans to Double West Qurna Oil Output

BAGHDAD, Iraq -- Russian oil pipeline construction company Zarubezhneftegazstroi, or Zangas, plans to almost double crude production at the West Qurna-1 oil field in Iraq, oil officials said.

The firm plans to involve an unspecified West European service company in cooperation with Iraqi oil authorities and local producers.

Since the sixth phase of the United Nations oil-for-food program, which was imposed on Iraq after the 1991 Gulf War, allows the nation to not only secure various equipment supply contracts with Iraq but also to carry out various technical works, Zangas is able to upgrade the field infrastructure in West Qurna-1 in the south of Iraq, the firm's Baghdad representative Pyotr Vlasov said Thursday.

He did not disclose how much the project would cost.

The West Qurna-1 deposit was secured by Russian firms Zarubezhneft, Zangas, and Mashinoimport under a deal organized by the Russian-Iraq government commission on economic and trade cooperation in 1997. But in July 1999 Zarubezhneft and Mashinoimport notified the Iraqi authorities via the Russian Fuel and Energy Ministry that they were quitting the project, Vlasov said.

"We have been forced to look for new partners, including Western firms, for the project," he said.

Nevertheless, Zarubezhneft and Mashinoimport will supply technical equipment for the project under the contracts within the oil-for-food program, said Vladimir Kalinichev, Zarubezhneft's Baghdad representative.

"The Iraqi side has recently expressed a desire to work on its own at West Qurna-1," Kalinichev said. Despite that, Mashinoimport shipped some infrastructure equipment to the oil field in April, he added.

West Qurna-1 produces roughly 120,000 barrels (16,400 metric tons) of oil per day. The Zangas project will help boost its output to about 200,000 barrels per day in the first half of 1999, Vlasov said.

Research institute TatNIPIneft has drafted the initial project blueprint.

Iraq produces about 2.6 million barrels of oil per day, or 130 million tons per year. Iraqi Oil Minister Amir Rasheed expects the country's total oil output to rise to 3.5 million barrels per day, or 175 million tons per year, in the first quarter of 2000, the Iraqi News Agency reported in June.

Russia's southern neighbor is allowed to export crude worth $5.26 billion under the UN oil-for-food program, which has been running since sanctions were imposed in 1990. Zangas has secured a quota to extract 8 million barrels under the program's sixth phase.

The next semi-annual phase is due to start in December.

Zangas is also involved in development of Iraq's Luheis, Nahr-Umr and North Rumalia oil fields. Before the war with Kuwait, the firm had 5,500 employees in Iraq.

"Due to the sanctions we are on standby mode," Vlasov said. "We won't make any profit from the West Qurna-1 project, but this is an investment in the future."