Russian oil giant Lukoil and Norway's state-run oil firm Statoil signed an agreement with Iraq to develop the West Qurna 2 oil field, one of Iraq's most active oil fields. According to press reports, West Qurna 2 has 12.88 billion barrels of recoverable crude and Lukoil and Statoil will aim to increase daily production there to 1.8 million barrels over the next 13 years.
The Lukoil-Statoil combination will receive $1.15 per barrel produced. The companies beat out competing bids from BP (BP) and France's Total (TOT). Lukoil was originally granted development rights in West Qurna 2 by Saddam Hussein in 1997, but he rescinded those rights earlier this decade, according to the New York Times.
Statoil (STO) will control 18.75% of the stake and Lukoil will hold 56.25% with an Iraqi partner controlling the remainder. Iraq, an OPEC member, currently produces 2.5 million barrels of crude per day, 1.9 million of which are exported, the Times said. Some analysts peg Iraq's reserves at over 100 billion barrels.
Lukoil, Russia's second-largest oil company, said it expects to invest $4.5 billion in West Qurna 2 over the next three to five years. In two oil field auctions this year, Iraq has awarded 10 contracts to foreign oil firms. West Qurna 2, discovered in the 1970s, lies in southern Iraq, north of the city of Basra.