Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Putin Asks Iraq to Revive Oil Deal

ReutersForeign Minister Hoshiyar Zebari, right, greeting Deputy Foreign Minister Alexander Sultanov in Baghdad on Monday.
President Vladimir Putin on Monday called on Iraq to support Russian investments, as LUKoil chief executive Vagit Alekperov arrived in Baghdad for talks to revive a Saddam Hussein-era oil deal.

Moscow has long fought hard to regain some of the Iraqi positions lost after the U.S.-led invasion of the country, including the $3.7 billion deal to develop the West Qurna oil field.

Putin's appeal to Iraq, in a letter to Iraqi Prime Minister Nuri al-Maliki, was the highest-level intervention to date.

"Our companies are ready to increase their contribution to rebuilding and modernizing Iraq's economic infrastructure, primarily in the oil and gas industries where we have accumulated large experience and have good prospects for the future," Putin said, according to a copy of the letter distributed by the Kremlin press service.

"I hope the Russian business community's intent to broaden cooperation will receive appropriate support from the Iraqi leadership," the letter said.

The letter specifically mentioned a project to rebuild a pipeline from Iraq's Kirkuk oilfield to Syria's Mediterranean terminal of Banias, in which Russian firms hope to participate, as well as the West Qurna field.

Russia established a consulate in the northern Iraqi city of Erbil in November, Putin said in his letter. A Russian diplomatic mission will also be opened in the southern city of Basra in the "foreseeable future," Putin said.

Alekperov and Deputy Foreign Minister Alexander Sultanov are currently visiting Baghdad to meet Iraq's political leaders.

"The chief of LUKoil will discuss with the Iraqi Oil Ministry the former oil contracts which have problems, one of which is the contract for West Qurna," Iraqi Foreign Minister Hoshiyar Zebari told reporters.

LUKoil spokesman Dmitry Dolgov said earlier Monday that Alekperov was in Baghdad to discuss renewing the West Qurna-2 concession.

The field, located about 150 kilometers north of Basra, holds about 6 billion barrels of oil, according to LUKoil estimates. By comparison, Iraq, holder of the world's largest oil reserves after neighbors Saudi Arabia and Iran, holds a total of 115 billion barrels, according to BP's Statistical Review of World Energy.

LUKoil has long hoped to revive the 1997 deal, but talks have been complicated by the fact that Saddam Hussein's government scrapped the agreement shortly before it was toppled in 2003.

LUKoil has lobbied the Iraqi government to renew the deal and to let it develop the field with U.S. partner ConocoPhillips. The Iraqi government said in December that LUKoil would have to bid again, after a new law governing the nation's oil industry is passed.

Dolgov declined to provide details on Alekperov's visit, citing security concerns. Iraqi Foreign Minister Hoshiyar Zebari invited Alekperov in February.

The Iraqi government is also in discussions with Chevron and Total to develop the same field. "We suggested to them they had better to discuss this issue directly with the oil ministry to reach a satisfactory compromise for both sides and not to be the prisoners of the past," Zebari said. "This contract, according to the Iraqi government, is cancelled."

LUKoil's shares closed 4.39 percent up on the MICEX.

Russia last month wrote off most of Iraq's $12.9 billion debt to the country and signed a cooperation agreement that Moscow said would open up Iraq for $4 billion in investment from Russian companies. (Reuters, Bloomberg)