Russian oil major Lukoil seeking change in compensation from OPEC producer
Lukoil (ticker: LKOH) will continue negotiations with the Iraqi government about the continued development of the Nasiriya project. The Iraqi government is trying to develop a 300 MBOPD refinery in the Nasiriya oil field, which is estimated to have over 4 billion barrels of oil in place.
Vagit Alekperov, president of Lukoil, told reports today that the company is still in the process of negotiating its participation in the project. Lukoil has been a sizable investor in OPEC’s second largest producer, with expectations of investing $42 billion in developing one of its other assets, the West Qurna-2 field, reports Bloomberg.
Alekperov said that the company would like to develop the Nasiriya project, but that the compensation system needs to be changed, reports Sputnik News. “We are talking about the system that would allow sooner funds compensation,” said Alekperov. “We believe that it is necessary to start production and after a certain time period to invest funds in the construction of the plant.”
Trouble receiving payment
Iraq is trying to increase production, but requires investment from international actors. Currently, Iraq owes the companies developing its oil assets about $9 billion for work done in 2014 and about $18 billion for this year, according to the International Energy Agency’s April report.
Companies like Lukoil are reviewing their plans to ensure they will be paid by the government, says Gati Al-Jebouri, senior vice president at Lukoil Overseas. Lukoil and its peers operating in Iraq are in talks with the Iraqi government about field development plans, which “will lead to postponements in production growth,” according to Al-Jebouri.
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