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. Last Updated: 07/27/2016

Iraq Says LUKoil Will Get a Fair Shake

Iraq's oil minister arrived in Moscow late Wednesday for talks with Industry and Energy Minister Viktor Khristenko and senior oil executives and said he would offer new terms for Russian companies seeking to work in the war-torn country.

Officials from a consortium of three Russian companies -- LUKoil, Zarubezhneft and Mashinoimport -- are expected to meet on Thursday with Iraqi Oil Minister Hussain al-Shahristani in a bid to regain access to the country's oil fields.

In particular, the companies will be hoping to revive a $4 billion deal to develop the 600,000 barrel-per-day West Qurna field, which was scrapped by dictator Saddam Hussein shortly before the U.S.-led invasion in 2003.

"Iraq will cooperate with those companies that will propose the best conditions for Iraq, regardless of what countries these companies come from," Shahristani said on his arrival in Moscow, RIA-Novosti reported.

Shahristani said no country would get preferential treatment in the competition for Iraqi oil assets.

"There will be no privileges for any country or any company," Shahristani said, RIA-Novosti reported. "LUKoil will be competing with other firms on equal terms in accordance with the new oil laws."

If LUKoil proposes projects that are competitive enough, it will get the contracts, Shahristani said.

LUKoil will likely be hoping to make use of its 20 percent U.S. shareholder, ConocoPhillips, to ease its way back into the country. LUKoil has offered Conoco a 17.5 percent stake in the West Qurna project.

In May, the Iraqi government said it was not prepared to accept a Russian offer to forgive $10 billion in Hussein-era debt in exchange for giving Russian companies access to another major oil field, in Rumaila, Reuters reported.

The visit comes as the Iraqi government readies a new law governing foreign investment in the country's oil industry, which has struggled to recover from underinvestment under Hussein and disruption by terrorist attacks under the U.S.-led occupation.

In April, LUKoil signed a partnership deal with the Foreign Ministry and said it counted on its support as it prepared for talks to revive the West Qurna oil deal. The ministry has praised the proposed investment law and urged Iraq to guarantee equal opportunities to all foreign oil companies.

Officials at the Russian companies said Wednesday that they hoped Shahristani would help to clarify the rules of the game for Russian and other foreign investors in Iraq.

"The Russian companies need to go back to Iraq," said Yevgeny Shestov, an official with Mashinoimport. "Any rules are better than no rules at all."

Analysts said it was not clear, however, to what extent the Iraqi government would welcome investment from Russia, which strongly opposed the U.S.-led military campaign to oust Hussein.

"Because Russia was so unsupportive in the U.S.-led war on terror, I am not sure to what extent the Iraqi government would be receptive to this claim," said Ariel Cohen, a senior research fellow for international energy security at the Heritage Foundation in Washington. If Russia wanted to renew its Iraqi projects it should contribute to tightening up security in the war-torn country first, he said.

"Iraq now is the most difficult place on the planet in terms of oil and gas business," Cohen said by telephone. "I wouldn't envy anybody who is going to clean up this."

Alexei Kokin, an oil and gas analyst at Metropol, said the Russian firms did have a chance to regain their position in Iraq but that they would be on shaky legal ground. "This is a painful matter," he said, adding that LUKoil did have a good chance due to its partnership with Conoco.

The Industry and Energy Ministry appeared eager Wednesday to keep the talks with Shahristani low-profile. A spokesman for the ministry only said the ministers planned to discuss energy security and declined to elaborate ahead of the meeting.

"This Iraq theme is such a delicate matter that I won't touch on it, so as not to do a disservice" to the talks, said an official with the ministry's department who helped prepare the visit. "Our companies worked there, invested lots of money and lost everything," she said, adding that it was only natural that the Russian companies hoped to regain a foothold in the country.

An official at the Iraqi Embassy said Shahristani would meet with a series of energy executives, but declined to elaborate further on his "busy schedule."

Senior LUKoil officials, including Andrei Kuzyayev, head of LUKoil Overseas, planned to take part in the talks with Shahristani, company spokesman Vladimir Semakov said. It was not clear whether company CEO Vagit Alekperov would cut short his vacation to come to the meeting, Semakov said.

Semakov said LUKoil would create some 2,000 jobs for Iraqis in one field at West Qurna alone. The company has invested "tens of millions of dollars" in the project but would plow in much more in the future, he said.

As the invasion of Iraq began, the Russian firms had to abandon their projects and evacuate staff.

Mashinoimport is to send a midranking official to Thursday's talks as the meeting is not expected to go beyond protocol talks, said Shestov, head of the company's oil and gas equipment department.

A spokeswoman for Zarubezhneft confirmed that a company official would be at the talks but said it was not clear whether the head of the company, Nikolai Tokarev, would be there.