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By John Lee.

Iraq's Foreign Minister, Hoshyar Zebari, has met the Russian Ambassador, Mr. Elia Murgunov, and handed him a reply message to his Russian counterpart Sergei Lavrov in response to his letter.

The meeting was attended by Undersecretary for Policy Planning, Chairman of the Department of Europe and the Director of the Office of the Minister.

(Source: Iraqi Ministry of Foreign Affairs)

By Thomas W Donovan, attorney at the Iraq Law Alliance.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Foreign "experts" like to depict Iraq's oil industry as a cesspit of corruption, turmoil and factional politics. In fact, however, Iraq has made real progress, and is aiming for more. But it is true that serious legal, political and technical challenges must be met if the sector's ambitious plans are to become reality.

Remember that the events of the last decade, beginning with the US-UK invasion of March 2003, have presented Iraq with far more social, economic, military, legal, political and infrastructure challenges than any of its Opec neighbours have faced.

Getting oil production up to the current level of about 3 million barrels per day (bpd) is an accomplishment in itself. Baghdad says production is at a 20-year high; the US says Iraq has now surpassed Iran in daily production.

The Iraqi government plans to keep pumping, and is bringing in major international oil companies. The government has now held four petroleum licensing rounds: in the first three, private companies bid to take over certain producing oil and gasfields from the old state monopoly company; the fourth was for exploration rights in promising areas not yet producing.

Russia's LUKoil said on Tuesday that Iraq has not asked it to replace Exxon Mobil at the West Qurna-1 oilfield.

Nefte Compass said last week that Iraq was considering replacing Exxon with either Russia's LUKoil and Gazprom Neft, but LUKoil Vice President Leonid Fedun (pictured) told Reuters:

"No one has offered us West Qurna-1 ... We respect Exxon and the Iraqi government a lot. But we are simply lacking the financial resources to take on such large projects at the moment."

LUKoil, Russia's second-largest crude producer, already holds a 75 percent stake in the adjoining West Qurna-2, after buying out junior partner Statoil in June.

Chief Executive Vagit Alekperov said LUKoil was in no rush to find a new partner.

"We have interested parties from the Gulf and from China," he told investors. "But we don't feel pressed to sell a share in the project."

Alekperov said 23 wells would be drilled at the oilfield by the end of 2013. LUKoil is targeting an internal rate of return of 15 percent versus earlier expectations of 13 to 15 percent.

(Source: Reuters)

By John Lee.

Presidents Maliki and Putin have issued the following statement after their meeting in Moskow:

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Prime Minister, ladies and gentlemen,

Our meeting with the Prime Minister of Iraq, Mr Nouri al-Maliki, was substantive and constructive.

Some significant changes have have been taking place in Iraq since Mr Maliki’s last visit to Moscow in April 2009 – changes for the better. Iraq’s leadership is doing much for complete national reconciliation and accord, socioeconomic problems resolution and restoring country’s positions in the region and on the international arena.

We sincerely wish our Iraqi friends success in rebuilding and strengthening their state and see the augmentation of our bilateral trade and economic relations and the deepening of our political dialogue as Russia’s input into the advancement of Iraq toward re-establishing its peaceful living.

During today’s detailed talks, we touched on nearly all the issues in our relations. We noted that, regrettably, we are still quite far from the trade level that had been achieved in 2003. At the same time, the growth rates in our relations are a cause for optimism. With every year, more and more Russian companies are participating in Iraq’s economic life.

We are grateful to the Iraqi side for resolving an issue that is highly important to us: ensuring security for our experts in Iraq.

We are seeing the renewel of our military and technical cooperation as well. Iraqi experts are familiar with our weapons, which have a good reputation, and I am certain that we will reach a mutual understanding in this important field, which certainly increases our trade and economic turnover and heightens the trust between our two states.

By John Lee.

Iraq is considering replacing ExxonMobil at the supergiant West Qurna-1 oilfield with Russian companies LUKoil and Gazprom Neft, according to a report from Nefte Compass.

Iraq regards Exxon's contracts in the northern Kurdish region of the country as illegal.

But if any agreement was reached at this week's meeting between Iraqi Prime Minister Nouri al-Maliki and Russian President Vladimir Putin, it has not been made public.

Reuters cites a spokesman for LUKoil, which operates West Qurna-2, as saying the company is not planning to increase its exposure in Iraq by acquiring a stake in West Qurna-1, reiterating the company's official line that it is satisfied with its portfolio in Iraq.

Gazprom Neft, the oil arm of the world's top natural gas producer Gazprom, declined to comment.

Sources have told Reuters that Russia's top oil company Rosneft, may team up with Exxon in Iraq after the two have struck a landmark agreement to jointly tap Arctic hydrocarbon riches and oil and gas in North America.

Rosneft also declined to comment on the possibility of entering Iraq.

(Source: Reuters)

By John Lee.

Iraq has agreed to buy 28 Czech-made Aero Vodochody L-159 advanced trainer/light-attack jets valued at $1 billion dollars (770 billions euros), a Czech defence ministry announced on Friday.

Agreement to buy the 24 new planes and four older army surplus aircraft was reached at the end of a two-day visit to Prague by Nouri al-Maliki.

Earlier in the week, Iraq and Russia announced a $4.2 billion arms agreement.

(Sources: Daily Star, Bloomberg, AFP)

By John Lee.

Russia has agreed to sell up to $5bn worth of arms to Iraq.

Are the motives behind the deal purely financial, and does it impact the delicate balance of power in the region?

Guests: Sabah al-Mukhtar, Jorge Benitez, Dmitry Babich:

(Source: Al Jazeera)

By John Lee.

A high-level Iraqi delegation visiting Russia has made quite a stir this week:

• Arms deals worth $4.2 billion were announced, making Russia Iraq's second biggest supplier of arms after the US;
• A memorandum of understanding was signed for political and diplomatic cooperation between the two countries, with Iraq asking Russia’s help to exit Chapter VII;
• Gazprom Neft said it intends to remain active in both Iraqi Kurdistan and southern Iraq;
• The Iraqi government approved LUKoil's exploration of Block 10;
• Relations between Nouri al-Maliki and Vladimir Putin seemed to be very harmonious.

The Iraqi delegation was headed by Prime Minister Nouri al-Maliki, and included the Minister of Foreign Affairs, Hoshyar Zebari; Chairman of the Advisers Council at the Cabinet, Dr. Thamer Al Ghadban; Legal Advisor to the Prime Minister, Dr. Fadil Mohammed Jawad; Chairman of the National Investment Commission, Dr. Sami Al Araji; and Iraq’s Ambassador to Russia, Fayek Neroy.

But taking the long view, the closeness between these countries is nothing new, and indeed Putin was keen to point out that "regrettably, we are still quite far from the trade level that had been achieved in 2003"; in other words, under the regime of Saddam Hussein.

While Iraq needs to maintain friendly relations with as wide a range of countries as possible, this rekindling of old relationships has certainly raised some eyebrows in the West.

Please tell us your opinion of the Iraqi-Russian relationship in the comments section below.

By John Lee.

Iraq is to buy more than $4.2 billion of weapons from Russia under contracts signed in recent months, the Russian government announced on Wednesday, making it the largest weapons supplier to the Middle East country after the United States.

While a spokesman for Russia's state-controlled arms exporter, Rosvooruzheniye, said it never discusses content of arms deals, the contracts are believed to include 30 Mi-28NE combat helicopters and 42 Pantsir-S1 mobile rocket launchers.

Russian state broadcaster RT says Iraq may also purchase Russian MiG fighter jets as well as armored vehicles.

Iraq is sending a clear signal to the U.S. that it can conduct an independent policy,” said Alexei Malashenko, a Middle East analyst at the Carnegie Moscow Center. “The message is: ‘We can sign contracts with Russia if we like.’”

Ruslan Pukhov, director of the Russian security and defence think tank CAST, said "this is absolutely sensational".

(Sources: Reuters, Bloomberg)

By John Lee.

Russian President Vladimir Putin (pictured) lobbied Iraq's prime minister on Wednesday to support Russian energy investment, according to a report from Reuters.

At talks with Nouri al-Maliki in Moscow, he also called for Russia to strengthen its presence in the OPEC state.

Gazprom Neft denied on Wednesday that it had frozen its contracts in Iraqi Kurdistan.

Russia's second-largest crude producer LUKoil is developing the West Qurna-2 oilfield, while mid-sized Bashneft has won the right to develop Block 12 along with UK's Premier Oil.

LUKoil also bought Statoil's share of West Qurna-2 in March, and CEO Vagit Alekperov said he would be open to taking a new partner on board.

(Source: Reuters)