Russia pushing for more Iraq oil deals before war
By Dmitry Zhdannikov
MOSCOW, Feb 21 (Reuters) - Russia is planning a last-minute push to clinch new oilfield contracts with Iraq in the final weeks before any U.S.-led war against Baghdad, oil industry sources said on Friday.
Russian Energy Minister Igor Yusufov is planning a secret visit to Iraq in the next few days to urge Baghdad to award a Russian company the contract to develop West Qurna, one of Iraq's biggest oil prospects, the sources said.
He also hopes to secure rights for smaller fields after Moscow met with fresh success in getting new deals in January.
Industry experts have said Russian oil companies are likely to invoke international law to protect their oilfield contracts in the event of a change in the government of Iraq.
Russian companies have the most to lose in Iraq should any new government seek investment from leading U.S., French and British oil majors to develop crude reserves that rank second in the world in size to Saudi Arabia's.
Russia's LUKOIL <LKOH.RTS> held rights to West Qurna until it was cancelled by Baghdad in December, apparently because LUKOIL had approached the Iraqi opposition to protect its position should war topple President Saddam Hussein.
A spokesman for the Russian Energy Ministry declined to confirm Yusofov's trip.
But another source told Reuters: "Of course, Iraq will be the key destination."
"He could try to bring a new Russian firm for Qurna. Otherwise Moscow could lose the field altogether in a few weeks," the source said, referring to the possible U.S. invasion of Iraq.
Another said: "He could try to negotiate other deals, including new smaller fields."
The $3.7 billion West Qurna deal was held by LUKOIL between 1997 and mid-December 2002 when Baghdad suddenly cancelled it, saying the company had failed to meet the terms of the deal by not starting development work. Gulf War U.N. sanctions outlaw any investment in Iraq.
LUKOIL said Iraq was trying to punish Russia for supporting a U.N. resolution to disarm Iraq. But industry sources said Baghdad may have decided to scrap the deal after discovering that LUKOIL was seeking guarantees for the deal from the Iraqi opposition in a post-Saddam Iraq.
Iraqi officials said in January that Baghdad still planned to give Russian firms priority in signing other new contracts but Baghdad has yet to reassign West Qurna.
In January, Baghdad awarded a contract to small Russian firm Soyuzneftegaz for the 200,000-barrel-a-day Rafidain field in southern Iraq and with medium-sized oil producer Tatneft <TATN.RTS> for block nine in the Western Desert.
Iraq has also started negotiations with Zarubezhneft, Russia's umbrella company for state holdings abroad, on the giant Bin Umar oilfield that was previously earmarked for France's TotalFinaElf <TOTF.PA>.
The French company also has high hopes for another big field, Majnoon, but has been careful not to sign contracts while sanctions remain in place.
The Gulf Russian mission this weekend is also due to take Yusufov to the United Arab Emirates, Oman and Bahrain although a Russian Energy Ministry spokesman declined to confirm any part of the trip.
Yusufov is expected to hold talks with OPEC producer UAE and non-OPEC Oman over the stability of world oil markets.