"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Thursday, March 27, 2008

LUKoil revive and seal a deal with Maliki and Talibani for Western Qurna-2 field - Russia writes off US$12 Bn debt to Saddam

We have many times referred to the contacts and connections between our old friend Vagit Alekperov and the Iraqi oil industry. Well just as the major US oilcos are signing "technical" agreements, Vagit calls to tell us he is in Baghdad cutting a deal for reviving the LUKoil's contract for Iraq's Western Qurna-2 field. West Qurna-2 field is one of the biggest in the world with the proven reserves of above 800 million tons of oil (6 billion barrels), according to LUKOIL.

Current estimates he tells us, involve a US $4 billion project with annual earnings from oil production at $21 billion. The Western Qurna-2 field should have been developed under a production sharing contract (PSC), an agreement on which was signed with beastly old Saddam in 1997 but was frozen in 2002.

Vagit tells us he was accompanied by the Russian Deputy Foreign Minister Alexander Saltanov and got to see Maliki and Jalal Talibani - which must have pissed off a few folks in the green Zone.

The presence of Saltanov ( a champion chess player) was a help to get a US$12 Bn Iraqi debt written off - which means nothing because they were never, ever going to collect. Clinching the deal was an agrement to make future investments of US$4 Bn. in the Iraqi oil and gas sector.... some of which no doubt "evaporated".

Of course 19% shareholders in LUKoil ConocoPhillips (with Mr Richard Armitage **** the signer of the PNAC and the man who told Mushariff that the US would bomb Pakistan into the stone age unless he behaved, as a Director) should / will receive a 17.5% stake in the Iraqi contract under their strategic partnership agreement with LUKoil.(The contract for production and development of the second stage of West Qurna-2 project was inked March 21, 1997 with LUKOIL having 68 percent in it. Once LUKOIL and ConocoPhillips became the strategic partners in 2004, LUKOIL undertook to transfer 17.5 percent to the U.S. company. )

Russia’s Zarubezhneft and Mashinoimport hold another 3.25 % in the project.

Western Qurna-2 field is unique. Oil lies near the surface , easy and low cost to extract - estimates are of the order of 30 million metric tons of high quality oil.(1 metric ton of crude oil = appr. 7.3 barrels of crude oil ...)

With oil price at US$730 per ton, ( approx US$100 pb) annual earnings from oil sales could easily gross US $21 billion.

Last year, LUKoil produced 96 million metric tons of oil.

**** Richard Armitage is also a director of ManTech International Corp. is an information technology company that does most of its work for the military, intelligence and homeland security agencies about whom Kate has such warm feelings. 95 % of their income comes from contracts with the Defense and Homeland Security departments and U.S. intelligence agencies.

Mantech still show Eugene C. Renzi as Senior EVP (died of cancer February 9, 2008 ) who is the daddy of Arizona Representative Ricky Renzi. newly indicted on, 35 counts of extortion,conspiracy, money laundering and related charges. He was on the House Intelligence Committee until FBI agents descended on his family business.,

Richard Armitage was one of the main architects behind US covert support to the Mujahedin and the "militant Islamic base," both during the Afghan-Soviet war as well as in its aftermath.

PS: Friday - Hit me between the eyes, Doh! For writing off a notional US$12 Bn. the Russians get the best , known, shallowest big oil field left to exploit - the US oilcos (whose tax payers have squandered 100's of US$ Bns) get 2 years "technical" studies. Now that is what in St. Petersburg they call a bargain.

Do a Google News search on Western Qurna-2 field a single hit on a Russian news agency. This afternoon Reuters reported "Iraq field could be worth $7bln to LUKOIL-JPMorgan" but provides no details and simply reports J P Morgan's research note.

This is massive news in the context of the post war development of Iraq - probably the most significant since the illegal invasion. See "22/03/04 Oil is not well in Iraq "I'n'I... "Last week, 15/3/04 - LUKOIL's chief executive Vagit Alekperov met Iraq's Oil Minister Ibrahim Bahr al-Ulum who has said that oil companies of different countries should do business in Iraq. According to him, talks with LUKoil were held in December 2003. During their March 11th meeting in Baghdad, they signed a deal to train Iraqi oil industry employees and students. 40 Iraqi students will study in Russia's I.M. Gubkin Oil and Gas University. Their numbers will increase to 100 students in 2005."

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