Russia-Norway team wins bid for Iraqi oil field

BAGHDAD: A consortium led by Russia's private oil giant on Saturday won the biggest prize of Iraq's second oil auction this year as companies snatch up major fields in the relatively calm south and balk at nearly all projects with higher security risks.

Lukoil and Norway's Statoil ASA took the biggest prize in the closing round of the two-day bidding: the 12.88 billion barrel West Qurna Phase 2 field in the Basra region. The deal was a coup for the Russian firm, which had been promised the field under Saddam Hussein's regime.

In the opening round Friday, an alliance grouping European giant Shell and Malaysia's state-run Petronas was awarded the 12.5 billion barrel Majnoon field, also in the south.

The two fields represented about half of the reserves up for grabs in Iraq's biggest postwar auction.

"We are very happy today," said Lukoil representative Andrey Kuzyaev.

Lukoil had signed a $3.7 billion contract with Saddam to develop the field in 1997, but the Iraqi dictator canceled the contract in 2002. The Russian hoped they would be able to revive the deal after the 2003 U.S.-led invasion that toppled Saddam. Following that war, Moscow wrote off most of Iraq's $12.9 billion in debts.

Also Saturday, Petronas linked up with Japex to reach a deal on a smaller field in the southern province of Nasiriyah.

But the 44 oil company executives from around the world showed their security concerns by balking at projects in the volatile eastern part of Iraq, near Baghdad and the northern city of Mosul. Five fields offered in those areas Friday drew no interest.

In an about-face, however, Angola's state-run Sonagol agreed Saturday to Iraq's lower financial terms for a field near Mosul.

On Friday, it has offered a bid that was initially rejected as too high.

Iraq is desperate for foreign oil investment to boost production and bring in new technology. Iraq holds the world's third largest reserves, but its energy infrastructure has been battered by decades of war and sanctions.