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[casi] Madrid Donors Conference - Russia

Moscow Times

Friday, Oct. 24, 2003. Page 5

LUKoil May Yet Develop Iraqi Field

Combined Reports MADRID, Spain -- LUKoil, Russia's second-largest oil
producer, is in talks with BHP Billiton, Fluor Corp. and Amec about a $600
million project to develop the West Qurna oil field in Iraq, one of the
world's largest deposits, Fluor said.

Fluor, the largest publicly traded U.S. engineering and construction
company, is conducting the discussions with its joint-venture partner in
Iraq, Britain's Amec, Europe's second- biggest rail-maintenance company,
said John Hopkins, Fluor's group executive.

BHP Billiton is Australia's largest oil and gas company.

"We're looking to see how we can help manage the field and expand
production," Hopkins said in an interview on the sidelines of an
international donors conference for Iraq in Madrid. The U.S. government's
Overseas Private Investment Corp. may help finance the venture, Hopkins

LUKoil won a contract in 1997 to develop West Qurna, which contains 7.3
billion barrels of recoverable reserves, almost a quarter of those in the
United States. The company held back from developing the field because
United Nations economic sanctions were in force at the time.

Ariane Gentil, a spokeswoman for BHP in London, and Dmitry Dolgov, a
spokesman for LUKoil in Moscow, declined to comment Thursday on the talks.

The field could produce as much as 1 million barrels per day within a few
years, LUKoil vice president Leonid Fedun said in an interview in December.
That development would cost about $6 billion.

Production could reach as much as 300,000 barrels per day within a year, at
an investment cost of $600 million, Fedun said.

Deputy Foreign Minister Yury Fedotov, Russia's diplomatic point man on Iraq,
told the conference that Russian companies are ready to make serious
investments in Iraq.

Fedotov "emphasized the readiness of Russian companies to enter into serious
investment initiatives, directed at helping the Iraqi people," the Foreign
Ministry said in a statement.

Fedotov met Thursday with Iyad Alawi, the head of Iraq's U.S.-appointed
Governing Council, and Iraqi Foreign Minister Hoshyar Zebari, in Madrid at
the international donors conference.

Russia has said it does not intend to contribute funds to rebuild Iraq, but
hopes to win international donors' support for the contracts its companies
signed with Saddam Hussein's regime. The contracts were part of the United
Nations' oil for food program.

Fedotov discussed those projects Thursday with the Iraqi officials, the
Foreign Ministry said. Earlier this week, Fedotov said 75 percent of
contracts signed by Russian companies with Hussein's regime had already won
preliminary approval. He voiced hope that other contracts for building power
plants, water purification facilities and other key elements of
infrastructure should be endorsed as well.

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