#15 - JRL 7140
Russian oil companies have little hope in post-war Iraq: US expert
April 9, 2003
A top US energy expert warned Russian oil companies Wednesday that they will likely be shut out of contracts to develop Iraq's vast oil reserves once the US-led war in the country is over.
"Our leadership follows this logic: it's unlikely someone will give you a piece of the pie if you didn't help bake it," Robert Ebel, top energy anaylst at the Washington-based Center for Strategic and International studies, said in an interview with Kommersant business daily.
Russian oil companies have invested more than one billion dollars over the past seven years into Iraq's vast oil reserves -- second only to Saudi Arabia -- but they risk exclusion from post-war contracts because of Russia's fierce opposition to the US-British war.
The expert's warning came as Russia's top oil major LUKoil said it would consider seeking a court injunction to block any attempt by competitors to develop Iraq's West Qurna-2 oilfield if its contract is thrown out by US-led forces governing post-war Iraq.
"We have the right to appeal to an international court if our rights on this contract are violated," a LUKoil spokesman told AFP.
LUKoil vice president Leonid Fedun threatened in an interview with Kommersant Tuesday to ask an international court in Geneva to block work on Qurna-2 for up to eight years if the oil company's contract to develop the oilfield was not honored once the US-led war was over.
He also threatened to get the Geneva court to seize all ships carrying Iraqi crude in the event of post-war forces throwing out the lucrative contract.
"When military operations are over and auctions begin, we will still consider the contract valid," the spokesman said.
"For now, arbitration is just a possibility, a hypothesis," he added.
LUKoil insists it still owns the right to develop the oilfield, despite Baghdad's cancellation of the deal in December amid reports that the oil firm was negotiating possible post-war scenarios with exiled Iraqi opposition groups.
"We consider the contract valid, but for the moment we are not talking about activities in terms of this contract because there are hostilities," the spokesman said.
Baghdad reiterated in February that the deal -- which gave LUKoil exclusive rights to develop West Qurna-2 -- was off.
LUKoil held a 68.5-percent share in a consortium to develop the oilfield with the Iraqi energy ministry and two other Russian companies signed in 1997.
Under the agreement, LUKoil was to invest some four billion dollars in the site's development by 2020, although the company has been unable to exploit the site due to UN oil embargoes on Baghdad.