LUKoil, Russia's largest oil company, expects to receive a commercial proposal from Iraq's South Oil Co. on provision of oilfield services at the Rumeila South field, Asat Shamsuarov, vice president of LUKoil Overseas, told reporters.

At the request of the Iraqi Oil Ministry, LUKoil prepared project documents for reconstructing the water cutting systems at the field.

"(South Oil Company) plans to invite LUKoil, at least, that is what they said, to work on this project as a service company, but no more than that," Shamsuarov said.

The field development has run into certain technical problems, he said. "We have drafted solutions to eliminate those problems," Shamsuarov said.

LUKoil only plans to work on the project if it is explicitly invited, he said.

"If they announce a tender, I'm not so sure we would be interested. If they make us a commercial proposal, then we are ready to look at it," he said.

The company prepared the documents under a memorandum of cooperation signed with the Iraqi Oil Ministry in 2004. Under that document LUKoil will also prepare draft documents on an appraisal of reserves at Rumeila South.

Transneft requests increase in oil transportation tariff

Russian oil pipeline operator Transneft has requested a 20.1 percent oil transportation tariff increase for 2008 from the Federal Tariff Service, Interfax cited a source as saying.

The expense of building the Eastern Siberia-Pacific Ocean pipeline -- both debt servicing and internal allocations -- is the main motivation for the requested increase, the source said.

"The position of the ministries is so far unclear, but that is what will determine the size of the tariff increase," the source said.

The FTS plans to make a decision on a tariff increase for Transneft before Dec. 19.

As reported earlier, the cost of building the first line of ESPO is constantly rising.

Transneft's rates increased an average of 8.7 percent effective Jan. 1, 2007. The oil transportation tariff increased 7.9 percent, while transshipment, loading/unloading, and acceptance/delivery services rose 3 percent.

TNK-BP unit to develop oil blocks in Iraqi Kurdistan

Norbest Limited, affiliated with Russian oil major TNK-BP, intends to start developing four oil blocks in Iraq's autonomous region of Kurdistan in 2008, Maarif Musayev, a spokesperson for the company said Tuesday, ITAR-TASS reported.

Norbest expects to register a company in Kurdistan in early 2008, Musayev said.

TNK-BP will be invited as operator of the project, Musayev added. TNK-BP will carry out geological exploration at the blocks, which could take about five years, under preliminary estimates, Musayev said.

Norbest Limited signed a production-sharing agreement with the government of Kurdistan in November to develop the four blocks.

The deal also must be approved by the Iraqi government, Musayev said.

Musayev did not specify the size of investment in the project.

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Closing oil prices, Dec. 12, 3 p.m. London

Brent crude oil: $90.60

West Texas Intermediate crude oil: $90.67

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(e-mail: energy@upi.com)