Lukoil dumps billions into Iraqi oil field

MOSCOW, Feb. 2 (UPI) -- Russian oil producer Lukoil said it plans to dump $30 billion into developing Iraq's West Qurna-2 oil field with its partners at Statoil.

Lukoil and Norwegian giant Statoil during the weekend signed off on the rights to develop the West Qurna-2 oil field near the southern port city of Basra.

Vagit Alekperov, the chief executive at Lukoil, said during a meeting with Russian Prime Minister Vladimir Putin he planned major investments at West Qurna to boost production levels, Russia's ITAR-Tass news agency reports.

"The investments Lukoil plans to make together with its partner Statoil in the first stage will amount to $4.5 billion," Alekperov said. "Overall investments will exceed $30 billion."

Investors shied away from the first postwar oil auction in Iraq in June. December auctions, however, were more lucrative, leading Baghdad to predict it could one day rival Saudi Arabia in terms of oil production.

Putin during his meeting with Alekperov described the deal as a victory, saying he hoped work would begin soon to bring "necessary dividends" to the Russian energy sector.

Drilling in West Qurna-2 is expected in 2011 with production slated for the end of 2012. Statoil said during the weekend the field should reach a peak production rate of 1.8 million barrels per day by 2017 and sustain that level for more than a decade.