Iraq Approves Sale of Statoil Stake in West Qurna-2 to Lukoil

Platts reports that the Iraqi oil minister, Abdul Karim Luaibi [Elaibi], has approved the sale of Statoil‘s 18.75% stake in the giant West Qurna-2 oil field to the project operator, Russia’s Lukoil.

Meanwhile, Reuters reports that the Norwegian oil giant has confirmed that it is in talks to sell its stake to Lukoil.

“Both Lukoil and the Iraq authorities have confirmed that we have initiated a process of transferring our interests in the West Qurna 2 project,” a Statoil spokesman said.

“I can confirm the process is ongoing but cannot say anything more. We will inform the market when the process is completed,” he said.

Lukoil declined to comment.

Analysts believe the move by Statoil makes sense as it would enable the company to concentrate more on projects elsewhere.

“This is positive for Statoil — they can now focus on areas where they can utilize their core compentences of deepwater and harsh climate drilling. That’s not being used in onshore Iraq,” said analyst Carl Christian Bachke at brokers RS Platou.

“This is a small part of Statoil’s overall asset base. What is interesting is that these service contracts in southern Iraq were done at levels which were not as prosperous as the majors had assumed when they entered Iraq. Lukoil’s and Statoil’s bids were the lowest, at ridiculously low levels,” Bachke said.

Statoil currently holds an 18.75% stake in the field, Lukoil has 56.25% and Iraq’s South Oil Company the remaining 25%.

The production target from the field is 1.8 million b/d, up from virtually nothing now, to be held for 10 years beginning in 2017.

The consortium agreed to receive costs recovered and split a $1.15/barrel remuneration fee.

Lukoil CEO Vagit Alekperov said on 22 February that the company was likely to delay again the startup of West Qurna 2 to early 2014, but initial production from the field is now expected to be at a higher level of around 300,000 bpd.

(Sources: Platts, Reuters)

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