Foreign Investment Continues, as Lukoil Announces Plans

Foreign direct investment continues in Iraq as the pace picks up on the rehabilitation of the country’s infrastructure and economic base.  Russian-based LuKoil is to drill its first exploration well at Iraq West Qurna 2. 

Mr. Vagit Alekperov CEO of LUKoil said that Russia’s largest privately held oil company, LUKoil, “[will] start drilling the first exploration well at the end of the year.”

Furthermore, recent reports show that there has been a recent turning point in the energy sector when it was announced that Iraq has stopped importing fuel for the first time since 2003. The Oil Ministry said in a statement. “We have reached the state of self-sufficiency in fuel products such as gasoline, kerosene and liquefied gas”.

Added to this is the news that Iraq’s Kurdistan region is ready to start exporting oil at a rate of 100,000 barrels per day as soon as a new Iraq government is formed, its Natural Resources Minister Ashti Hawrami said recently.  “We can begin exporting 100,000 barrels per day tomorrow – as soon as we have a government,” Reuters quoted Hawrami as telling reporters at an industry conference.   “And we can get to 200,000 to 250,000 by end year,” he added.

Mr. William Wakeham, Managing Director of Anglo Arab Insurance Brokers observes “The tide is turning as oil imports decrease and exports increase.  This marks a change in equilibrium for the Iraqi energy sector, in a very real sense”.

With this increase in activity comes all the support and complementary industries necessary to advance the stabilization of the oil and gas industry.  Gazprom Neft is leading a consortium of investors in Iraq calling on the government to clear mines from the Badra oil field near the Iranian border.  Iraqi authorities report there are more than 27 million pieces of unexploded ordnance in Iraq from the war with Iran in the 1980s. The largest number of mine fields is near Badra in Wasit province.

Mr. Wakeham goes on to say.  “We have clients in many sectors including Oil & Gas as well as de-mining.  It is clear that investment has been mobilized.   AAIB are gearing up our efforts to help these customers to transfer and to manage their exposures.”

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