Izvestia: “Russian business returning to Iraq”
LUKOIL CEO Vagit Alekperov told Prime Minister Vladimir Putin that the company will produce its first oil in Iraq in 2013. But analysts doubt the feasibility of this plan.
Putin and Alekperov discussed foreign projects. Alekperov said foreign oil accounted for 6% of LUKOIL's entire output, as well as for 20% of corporate profits. The company owes this impressive performance to the fact that it pays no turnover tax abroad.
"We will continue to develop our project in Iraq," Alekperov said. "Our employees have already established a gated community. The corporate security service and Iraq's oil police are working together. We expect to produce the first oil in 2013," Alekperov added.
LUKOIL and Norway's Statoil have won an international tender to develop the West Qurna 2 deposit containing an estimated 12.9 billion barrels of crude oil. LUKOIL plans to invest $4.5 billion in production during the first stage. The total corporate investment is expected to exceed $30 billion.
Under the 20-year contract which can be extended for another five years, LUKOIL will not own the oil being produced there but will receive a fixed royalty after daily production exceeds 120,000 barrels. Every surplus barrel will earn $1.15. Actually, this is LUKOIL's second attempt to gain a foothold in Iraq. The first contract to develop the huge West Qurna 2 deposit was signed in 1997. Alekperov's company expected the UN to lift its sanctions against Iraq and started building the required infrastructure at the deposit.
Two years later, Iraqi authorities cited LUKOIL's inactivity and terminated the contract in 2002.
In spite of all of this, analysts do not share Alekperov's optimism.
"LUKOIL has always expressed interest in oil projects in the Middle East and Africa. Besides Iraq, this includes Syria and Libya. But it's still premature to talk about oil production in Iraq," Vladimir Rozhankovsky, chief analyst at Nord Capital investment group, told the paper.
He said the Iraqi war, raging since 2003, has seriously damaged the required production infrastructure. Everything was to have been restored by 2012. But this will not happen on time.
"At any rate, it will be impossible to restore the situation to pre-invasion levels. The global economy has let us down," Rozhankovsky noted. "Alekperov is making a strategic move. Their presence is more important than profits at this point. LUKOIL which has accumulated experience in global market operations will be there when the infrastructure is ready," Rozhankovsky noted.
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Tourist plan for the Caucasus.
A state programme to develop the North Caucasus has been drafted, Deputy Prime Minister and Presidential Plenipotentiary Envoy in the North Caucasus Federal District, Alexander Khloponin, told Prime Minister Vladimir Putin.
He said the state programme could be submitted to the government for consideration this June, and that it should be discussed by a government commission in advance.
"I believe we should assess specific projects which we can and will implement right now, in the near future. We can't wait, and we can't stand idle. Or you and I will have to write up the plans. And when are we going to work? We must get down to business," Putin said.
"We are not standing idle. We have prepared 30 specific projects under this programme. All these projects can be launched this year, assuming state guarantees," Khloponin objected.
He said documents laying out an expanded tourist industry, primarily mountaineering, had been drafted under the regional development strategy. Moreover, there are plans to establish the North Caucasus Federal University, to expand the light industry and to develop the Caspian Sea shelf.
