Iraq, Russia Sign Three Oil Accords

BAGHDAD, Iraq – Iraq and Russia signed three oil agreements Friday for exploration and development of oil fields in southern and western Iraq.

The accords were signed at the Oil Ministry in Baghdad between Iraqi Oil Ministry undersecretary Hussein Suleiman al-Hadithi and Ivan Matlashov, Russia's first deputy energy minister.

The new deals were announced after the Russian oil company Lukoil said Friday that it had persuaded Baghdad to reverse a decision made in November stripping Lukoil of the right to develop the giant West Qurna oil field.

"Iraq never revoked the license. The agreement wasn't legally broken, there was only a letter of intent. Now the agreement is back to where it was," Grigori Volchek, spokesman for Lukoil Overseas, told Dow Jones Newswires.

Al-Hadithi, however, equivocated when asked about the Lukoil contract.

"This subject is left to circumstances. However, we affirm that the Russian companies have the priority," he said.

Iraq's initial action against Lukoil closely followed Russia's support for a tough U.N. resolution requiring Baghdad to cooperate with U.N. weapons inspectors. Iraqi officials have denied any political motives.

The first of the three new accords signed Friday is for development of the al-Rafidain oil field in southern Iraq by Russia's Soyuzneft company.

The second covers the exploration and development of a concession in the Iraqi western desert by Stroytransgaz, another Russian company.

The third provides for future plans and projects to be implemented by Russian companies in Iraq. No further details were given.

Matlashov said his talks in Baghdad dealt with cooperation on energy, particularly oil field exploration and drilling and "supplying materials related to West Qurna and Rafidain oil fields."

Al-Hadithi said implementing the agreements will lead to increased oil and gas production in Iraq.

After the signing ceremony, al-Hadithi told reporters that Iraq's relations with Russia are "strategic and firm."

While urging Iraq to open up to U.N. inspections, Russia has maintained its opposition to possible U.S. military action against Iraq and warned Washington that it must not act without explicit U.N. approval.

Russia is one of Iraq's strongest supporters in the U.N. Security Council, repeatedly calling for the lifting of U.N. sanctions imposed on Iraq for invading Kuwait in 1990.