Vagit
Alekperov, OAO LUKOIL President, signed a development and production agreement
at the Iraqi West Qurna-2 field in Baghdad today.
As was
reported earlier, OAO LUKOIL and Norway’s Statoil, acting together as a
consortium, emerged victorious in the bidding for the development of this field held in
December 2009. The winning bids of LUKOIL and Statoil were: a remuneration fee of USD 1.15 per barrel of oil at the production level of 1.8 million
barrels per day.
The
agreement was ratified by the Iraqi Cabinet of Ministers.
The
agreement will last 20 years with the possibility of a five-year extension.
The
parties to the agreement are: Iraq’s state-owned South Oil Company and the
contracting consortium formed by the Iraqi state-owned North Oil Company (25%),
OAO LUKOIL (56.25%) and Norway’s Statoil ASA (18.75%).
Drilling
operations will start at the
West Qurna-2 field in 2011,
with production beginning before the end of 2012. The
target production level of over 90 million tons of oil per year is expected to
be reached in 2017. The development plan of the West Qurna-2 field calls for additional seismic work,
drilling of more than five hundred wells.
According
to preliminary estimates, LUKOIL’s investments in the West Qurna-2 field are
expected to come to about USD 300 million in 2010 and to USD 4.5 billion during the next four to five years.
The West
Qurna-2 field, with its recoverable reserves of about 13 billion barrels, is
located in the southern part of Iraq, 65 kilometers to the north-west of Basra, a major
seaport. The field was discovered in 1973. Geologic exploration (2D seismic and
drilling of exploratory wells) was conducted by the Soviet Union’s geological
and service organizations.
The information in the press release is based on the
preliminary data that may be specified and adjusted in the process of
implementation of the agreement. Thus, the data above may differ from the
overall financial and production indicators. The data regarding the reserves and
other significant project-related conditions have not yet been reviewed by
independent auditors of the Company. In case such auditing is conducted in the
future, and amendments will have to be introduced into the reporting statement
based on the auditing results, the Company is not claiming these amendments will
be insignificant.
