Alekperov: LUKOIL continues negotiations for Iraqi oil field Nasiriyah

Alekperov: LUKOIL continues negotiations for Iraqi oil field Nasiriyah

VIENNA, 3 December. LUKOIL continues negotiations for Iraqi oil field Nasiriyah. This was reported to journalists by the head of the Russian company Vagit Alekperov.

“Another question Nasiriyah, we continue this conversation until consortium, lead a discussion, project, heavy, very difficult given the refineries. But the Iraqi side wants to implement this project, they have a great desire. We negotiate”, he said.

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© Valery Sharifulin/TASS/Archive

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As previously reported, LUKOIL has proposed to the government of Iraq a new approach to the development of the Nasiriya field. Then Alekperov explained that the essence of the proposals was the issue of cost recovery of the investor. Russian company offers in the first phase to begin development of the Deposit, and the funds gained from revenues from production at the field then be directed to the construction of the refinery.

LUKOIL has successfully passed the qualification process on a project to develop the Nasiriyah field and refinery construction. The tender for the project was announced in November 2012, involves 7 companies. Due to the complicated military-political situation in the country, this tender has been postponed.

Nasiriyah reserves are estimated at 4 billion barrels of oil, the refinery capacity for processing shall be 300 thousand barrels of oil per day (14 million tons per year).

To cover the costs

Also the head of the company said that LUKOIL will cover the costs for the project “West Qurna-2” in Iraq in the first half of 2016. In January-March the company will continue to invest in the project.

“According to our schedule, we’re somewhere, probably in the first half of may to the beginning of the third quarter, will cover all of its costs and investments will be to do another 3 months,” he said.

According to Alekperov, the company receives from the Deposit of a large amount of oil and quickly reduce the debt. “We hope, in January, February, March, if the pace continues, it will significantly improve the situation”, – said the head of “LUKOIL”.

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Alekperov added that LUKOIL has written to the Iraqi government its proposals to change the contract, it regards them. “At the end of the third quarter or early fourth, we get some details (from the government),” he said.

Alekperov earlier said that Iraq is an ongoing debate about increasing the amount of remuneration received by the company as operator of the project “West Qurna-2”.

According to the contract, investments into the second phase of development of the field “West Qurna-2” is about $3-5 billion a year. Remuneration of LUKOIL as operator of the project is one of the most minimum among Iraqi contracts with foreign investors and is just over $1 per barrel.

In early June 2014 LUKOIL acquired the right for reimbursement of expenses on the Iraq project “West Qurna-2”, after the company has met the requirements of the service contract for development and production at the field pertaining to the achievement of first commercial production. In accordance with this requirement, the average production at the field should be at least 120 thousand barrels per day for 90 calendar days. In accordance with the contract, this requirement gives LUKOIL as operator of the “Western Qurna-2”, the right to reimbursement of expenses and remuneration for the project.

The field “West Qurna-2” is located in the South of Iraq, 65 km from the city of Basra. Participants of the project for its development are the South oil company, Ministry of oil of Iraq and a consortium of contractors comprising LUKOIL (75%) and state-owned North oil company of Iraq (25%).

Refinery in Burgas will work on Russian Urals

Vagit Alekperov said that the oil refinery LUKOIL in Burgas (Bulgaria) will work in the next four months on the Russian oil Urals.

Earlier it was reported that this refinery was supplied by Saudi oil. Alekperov said that it is not.

“In the next 4 months the plant will operate on Urals”, – he said.

“The refinery in Burgas has a unique deep treatment complex, recycles about 20 varieties of oil, we do mix. Also as an experiment we tried the oil-Ceyhan and Kirkuk”, – said the head of “LUKOIL”.

The Board of Directors of Lukoil International

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Alekperov also said that LUKOIL on 4 December in Vienna will hold a Board of Directors of Lukoil International, plans for meetings with Ministers of oil of the OPEC not.

“Tomorrow we have a Board of Directors of Lukoil International here,” said Alekperov. To a question whether he planned to hold more meetings with Ministers of oil of the countries of the OPEC, he said, “No.”

Thursday Alekperov met with Ministers of oil of Iran and Iraq to discuss joint projects.