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To: tsigprofit who wrote (12286)	4/9/2003 3:51:17 PM
From: Bucky Katt	Read Replies (1) \| Respond to of 13094

Lukoil Vows to Defend Contracts With Iraq By JEANNE WHALEN Staff Reporter of THE WALL STREET JOURNAL MOSCOW -- Russia's biggest oil company, OAO Lukoil, promised to fiercely defend its claims to a giant Iraqi oil field, saying it would impound Iraqi oil tankers and initiate international arbitration against anyone who tries to abort a contract it signed with Saddam Hussein's government. The salvo was a clear sign that Russia intends to protect its economic interests in post-Saddam Iraq. Moscow sharply criticized the Bush administration for starting the war, but has tempered its rhetoric in recent days and pledged to keep pursuing positive relations with the U.S. Baghdad already announced it was revoking the oil contract late last year, but Lukoil maintains it is still valid, claiming that only an international arbitration panel can scrap it. Mr. Hussein awarded Lukoil majority control of the West Qurna field in 1997 in a bid to win Moscow's help in ending United Nations sanctions. In December, angered by reports that Lukoil had been negotiating with Washington about a post-Saddam Iraq, Baghdad said it was scrapping the deal. Holding an estimated 15 billion barrels of oil reserves, West Qurna is one of the world's biggest oil fields and by far Russia's most valuable oil asset in Iraq. "Without us no one will be able to develop [West Qurna] ... it is our field from a legal point of view," Leonid Fedoun, vice president at Lukoil, told the Kommersant newspaper yesterday. "If anyone tries to squeeze us out of there, Lukoil will file an international arbitration suit in Geneva," he said, adding that such legal wrangling would tie up development of the field for up to eight years. If a new Iraqi government tries to declare the contract invalid and signed by an illegal regime, Lukoil will turn to the Geneva court to try to impound tankers carrying Iraqi crude until the matter is settled, Mr. Fedoun added. He couldn't be reached for further comment. Developing West Qurna will require $6 billion in investment, a sum most analysts believe Lukoil can't marshal on its own. Two small, state-owned Russian firms, Zarubezhneft and Machinoimport, own minority stakes in the project. Some analysts believe Lukoil would need to find Western partners to help it shoulder the steep investment costs. While the Kremlin has disappointed Washington by opposing the war, Lukoil might be in good standing thanks to its reported talks with U.S. energy officials about cooperating in post-Saddam Iraq. Iraqi officials accused Lukoil of siding with the Americans late last year, after a deputy U.S. energy secretary paid a visit to the Russian company's Moscow headquarters. Lukoil has declined to comment on the matter. Baghdad also accused Lukoil of failing to make required investments in the field, a charge Lukoil denied. The West Qurna contract stipulates that major investment can't begin until sanctions are lifted. Iraqi exiles and U.S. officials meeting in London last weekend agreed that international oil companies should play a role in the post-war rehabilitation of Iraq's oil fields, saying that a new regime could strike production-sharing agreements with foreign investors. Recently, a number of major oil companies have become less shy about expressing interest in someday investing in Iraq. But executives have warned that real opportunities may only come months, if not years, after a stable post-Hussein government takes over. Meanwhile, U.S. Army engineers and private contractors are just now assessing the condition of Iraq's southern oil fields, which were seized in the first days of the invasion late last month. Officials estimate that repairs necessary to restore oil exports could take months, making it unlikely that new oil-development deals will be signed any time soon.