As for the Middle East, Iraq has become the focal point of LUKOIL’s strategic policy, intended to ramp up the company’s production outside Russia. Iraq is one of the world’s most promising regions for building up production due to its enormous reserves of conventional hydrocarbons. For LUKOIL, with its vast history of onshore production and development of conventional oil, Iraq is very appealing in terms of business development and application of the lessons learned. In 2014, LUKOIL produced the first oil at West Qurna-2, a field in southern Iraq. This is one of the world’s largest fields. LUKOIL is also a party to an exploration project, covering Block 10 located in proximity to West Qurna-2.
|LUKOIL MID-EAST LIMITED||Production of oil, gas and condensate|
|LUKOIL Overseas Iraq Exploration B.V.||Geological exploration|
|LUKOIL International Services B.V.||Service|
The West Qurna-2 field is located in southern Iraq, 65 kilometers north-west of Basra, one of the world’s largest fields.
In March 2014, commercial oil production commenced at the field.
2D seismic surveys of Block 10 in southern Iraq were fully completed by LUKOIL six months ahead of schedule.
The first-ever tanker carrying cost recovery oil intended to make up for the costs sustained by PJSC LUKOIL as part of the West Qurna-2 project left the sea port of Basra.
LUKOIL awarded the right to recover costs and earn compensation under the West Qurna-2 project.
The Company produced its first oil at the West Qurna-2 field.
LUKOIL started 2D seismic surveys at Block 10 located in southern Iraq.
The parties made a supplementary agreement to the service contract for the development and production at West Qurna-2. The project’s oil production targets dropped from 1.8 mln to 1.2 mln bbl./day, while the periods of target production levels maintenance was prolonged from 13 to 19.5 years and the overall contract term was extended from 20 to 25 years.
Statoil assigned its 18.75% interest in the West Qurna-2 development and production consortium to PJSC LUKOIL. LUKOIL’s share in the project went up to 75%.
A first production drilling and ground-breaking ceremony for the oil treatment unit (OTU) was held at the West Qurna-2 field.
LUKOIL signed a number of contracts, as part of the West Qurna-2 development and production project, with Samsung Engineering (South Korea) – for the construction of an oil treatment unit and gathering system (OTU); with ENKA Insaat (Turkey) – for the construction of a gas turbine power plant (GTPP); and with the consortium of Entrepose Projets/Rosco (France-Jordan) – for the expansion of the Tuba tank battery.
The Final Investment Decision (FDI) was made for the Early Mishrif Oil project. The First stage of the West Qurna-2 development actually commenced.
A turnkey contract was signed with Baker Hughes for the production drilling and development of 23 wells at West Qurna-2.
A Service contract for the development and production at West Qurna-2 took effect following its ratification by the Iraqi Council of Ministers.
A Service contract was signed for the development and production at the West Qurna-2 field.
The consortium of PJSC LUKOIL and Statoil (Norway) was declared the winning bidder and was awarded the West Qurna-2 development rights.
LUKOIL has invested a great deal of effort to provide better living standards for local residents in the areas of its operations in Iraq. In the past few years, LUKOIL created thousands of jobs, and hundreds of personnel received training at the training center for the Iraqis employed at West Qurna-2. The social program of LUKOIL, that has been around for some years, is already part of the West Qurna-2 project seeking to improve the physical infrastructure of educational, healthcare and sports institutions. The Company has been very active in providing support to local communities, launching multiple projects to re-equip local schools, purchase computer equipment, arrange for regular supplies of drinking water to schools, build sports facilities and purchase state-of-the art medical equipment for local hospitals.
A new Development Plan of West Qurna-2 field that provides for an oil production plateau of 800 thousand barrels per day was signed by LUKOIL and the Basra Oil Company. The experience acquired by the Company in the region, the existing infrastructure and cost compensation within the project development from the current production will ensure maximum efficiency of the project implementation.