Iraq Breaks Deal With Russian Oil Company
Iraq has scrapped a $3.5-billion oil field deal with Russia’s Lukoil, the company said Thursday, a major economic reversal there for Russia at a time when both Baghdad and Washington are courting Moscow’s support in the event of war.
Lukoil, which leads the group tapped to develop the massive West Qurnah oil field, said it had received a letter Monday from a deputy Iraqi oil minister breaking the 23-year contract.
A spokesman for Lukoil, Alexander Vasilenko, denounced the move as “blackmail” and said the firms would fight the decision in court.
“We do not understand how a petty bureaucrat from Iraq’s oil ministry can cancel up a law that has been passed by Iraq’s parliament,” Vasilenko said.
“Lukoil will take all appropriate action to defend its rights,” the company said in a statement.
The West Qurnah deal is by far the most significant oil development project undertaken in Iraq by Russian companies, but it has been stalled by continuing U.N. sanctions. The Iraqis have pressured Lukoil to defy the sanctions and begin work, but it has refused.
Iraqi Oil Minister Amir Rashid Mohammed Ubaydi, attending an OPEC meeting in Vienna, would say only that contracts were liable to cancellation if companies did not fulfill their drilling obligations.
“Any company that does not fulfill their obligation over a long time, then we will be free to cancel their contract,” he said.
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