Page 4 - MEOG Week 31 2021

MEOG COMMENTARY MEOG

Lukoil retracts move to

sell stake in West Qurna-2

The Russian company is reported to have backtracked on plans to sell its stake in West
Qurna-2 to Chinese companies as Baghdad seeks to stem the tide of IOCs making for the exit.

IRAQ IRAQ’S Oil Minister announced this week to retain the stake, there is room for ambiguity.
that Russian oil firm Lukoil is retracting its Despite being located in the south-east of the
announced desire to sell its 75% stake in the country, Lukoil is partnered in the WQ-2 TSC
WHAT: technical service contract (TSC) for the West the state-owned North Oil Co., which holds a
Iraq’s Oil Minister says Qurna-2 oilfield to Chinese companies. carried 25% interest.
that solutions have been Speaking to Iraq’s Al-Sabah newspaper, Ihsan
developed to resolve Abdul Jabbar said that around six months of dis- Frustration
problems faced by Lukoil cussions between the Ministry of Oil (MoO) and Lukoil is understood to have grown frus-
at the supergiant asset. the Russian firm had “contributed to the com- trated by OPEC+ quotas and the terms of its
pany’s official retraction from its desire to offer TSC, which provides the Russian company with
WHY: part of the shares for trading for sale to other the lowest fees of any of the rates agreed during
The country has already companies”. Iraq’s first four bid rounds between 2009 and
been dealt blows by Abdul Jabbar noted that the ongoing efforts 2012.
efforts by ExxonMobil to by IOCs to leave the country is because “invest- With a maximum remuneration fee of $1.15
exit the West Qurna-1 ment in Iraq is not appropriate for the major per barrel, according to Wood Mackenzie,
licence with BP also investors and that they either look for other mar- Lukoil’s net profit from WQ-2 is just $0.56 per
reported to been keen to kets or partners in the renewable energy”. barrel of oil equivalent when considering state
depart. However, he added: “Understanding the equity interest and tax, with this dropping to
motives of (Lukoil) has contributed to develop- $0.19 per boe after applying the performance
WHAT NEXT: ing solutions in co-ordination with the Ministry factor.
Much will likely depend of Oil for some of the problems that the company In late May, Lukoil began a three-well pilot oil
on the seriousness with believes have changed positively for the benefit production programme targeting the Yamama
which Iraq approaches of both parties.” formation at WQ-2 to produce 10,000 bpd per
the ongoing review While it can be deduced that Lukoil now plans well over the next three months.
of contracts with
international operators,
with calls for their terms
to be altered appearing to
have fallen on deaf ears
for years.

P4 www. NEWSBASE .com Week 31 04•August•2021