BAGHDAD, (Reuters) – Iraq’s Oil Ministry reiterated on Monday that a $4 billion, Saddam Hussein-era deal with Russian oil major LUKOIL had been scrapped and said it would not be revived.
LUKOIL had hoped to resuscitate the deal to develop the vast West Qurna field in Iraq’s southern desert. Russian oil officials had said LUKOIL and other firms were prepared to change the terms of old contracts.
“Iraq has declared before that all the contracts made or signed during the Saddam era were cancelled,” oil ministry spokesman Assem Jehad said.
“All old contracts will be reviewed and they all must be subjected to the new Iraqi oil law,” he said.
Iraq’s central government agreed on a draft oil law early this year, but the long-awaited bill still has not been passed by parliament.
The politically sensitive new law will determine how revenue from the world’s third-largest oil reserves is shared among Baghdad and Iraq’s provinces and how contracts are awarded.
Frustrated by delays and disagreements over amendments to the law, the semi-autonomous Kurdistan Regional Government in Iraq’s north approved its own oil law in August and has since signed several contracts.
Iraqi Oil Minister Hussain al-Shahristani has repeatedly said the contracts are illegal.
Some analysts have said U.S. oil major ConocoPhillips, which holds 20 percent of LUKOIL, could help the Russian company revive the contract.
But Jehad said Shahristani had told his Russian counterpart Viktor Khristenko during meetings in Moscow in August that LUKOIL’s deal in West Qurna would not be revived.
Shahristani said after that meeting that Iraq hoped to call an open race for its prized oilfields as early as September.
That has so far failed to materialise, with still no sign of the new oil law that would open the way to call for tenders for about a third of Iraqi oil fields.
Jehad said LUKOIL would be welcome to join all other potential new bidders for West Qurna.
“They can deliver their offer and I can say that their offer may get some priority because they already delivered one before,” he said.
Shahristani has also said Moscow was making no connections between oil contracts and Iraq’s $10 billion outstanding debt to Russia.
Analysts have long said the West Qurna deal could bring benefits only in the distant future.