"Gazeta": "All is Quiet in Baghdad"
Russian oil companies can return to Iraq.
Russian oil companies have a chance to return to Iraq, as became clear after the Iraqi Prime Minister Nouri al-Maliki visited Moscow. This was the first visit to Russia by the head of the Iraqi Cabinet formed under the country's constitution adopted in October 2005.
During the course of his negotiations with his opposite number, Vladimir Putin, al-Maliki confirmed that Iraq was interested in broader cooperation with Russia and in seeing the Russian companies, notably oil companies, back in Iraq. "Baghdad guarantees protection of investments in the Iraqi economy," he said. Iraq may renew the contracts of Russian companies in gratitude for writing off much of Iraq's debt to Russia, and if Russia helps Iraq to get the current sanctions lifted.
The dispute over West Qurna
Prior to the fall of the Saddam Hussein regime, Iraq was one of Russia's main trading partners. In March 1997, LUKoil signed a contract with the Iraqi Oil Ministry for the development of the second stage of one of the world's largest oilfields, West Qurna-2 (with proven resources estimated at 6 billion barrels of oil).
However, in 2002 Baghdad broke off the agreement claiming that the Russian side failed to honour its terms. In late 2007, the Iraqi Oil Minister Hussein al-Shahristani announced that the contract was null and void and that LUKoil could participate in a new tender along with other contenders, and that it could not claim back its investments in geological prospecting and personnel training. LUKoil challenges that decision.
During the recent Moscow talks the parties agreed to reactivate the prewar contracts, but it is unclear whether that also applies to LUKoil's contract.
After a meeting with al-Maliki, LUKoil President Vagit Alekperov merely said that LUKoil was ready to harmonize its contract for the development of West Qurna-2 with the new laws of Iraq. According to Mr Alekperov, the company is ready to develop West Qurna and has all the technology for an early launching of the operation of that field.
The Russian Energy Minister, Sergei Shmatko, said a special commission to review earlier-signed energy contracts would be set up shortly. "The Governments of the two countries have instructed the relevant agencies to resume this work", said Deputy Foreign Minister Alexander Saltanov.
The Energy Harta
The two prime ministers also agreed that Russian enterprises would be allowed to bid in tenders for other oil and gas deposits in Iraq on an equal footing with other companies.
Some Russian companies (Tekhnopromexport and Stroitransgaz) have been invited to contribute to the reconstruction of Iraq's power industry and infrastructure. "Russia has got some tempting proposals inviting Russian companies to take part in the restoration and modernisation of Iraq's power industry", Sergei Shmatko said.
Thus, Tekhnopromexport and the Iraqi Electricity Ministry have signed a $133 million contract for the reconstruction of the Harta Thermal Power Plant to be financed by the World Bank. Under the contract, within 30 months of its coming into force Tekhnopromexport is to restore the second and third 200-megawatt units at Harta, supplying, assembling and tuning up Russian and foreign equipment.
After the talks Prime Minister Vladimir Putin said that cooperation between Russia and Iraq in the military and military-technical spheres could resume. "These negotiations are in the practical contacts stage. I consider their full-scale resumption possible," Mr Putin said.
The first step towards restoring military-technical cooperation with Iraq is a contract to supply 22 Mi-17 helicopters.
"Of course it is unrealistic to expect that we can resume our military-technical cooperation with Iraq on the same scale as before. There is no doubt that all of Baghdad's arms deals, at least in the foreseeable future, will be strictly controlled by the US. Yet, even despite this, supplies of Russian arms to Iraq can be considerable," a Russian negotiator said.
Oil for debts
However, the resumption of old contracts comes to Russia at a price. It will be recalled that in February 2008 Russia forgave Iraq 80% of Saddam Hussein's debt which amounted to $12 billion. Baghdad also needs Moscow's support in getting UN sanctions against the Saddam Hussein regime lifted. Some of these sanctions are still in force. To solve this problem all the UN Security Council members, including Russia, must reach a consensus.
Andrei Biryukov
