Iraqi PM, Russian leaders discuss energy deals

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Friday, April 10, 2009

al-Maliki made his first visit to Russia since becoming Prime Minister of Iraq.
Image: Jessica J. Wilkes, U.S. Air Force.

Iraqi Prime Minister Nouri al-Maliki made his first official visit to Russia on Friday, aiming to strengthen economic ties between the two countries, particularly in the energy sector.

Al-Maliki met in Moscow with his Russian counterpart, Vladimir Putin, as well as Russian President Dmitry Medvedev. The primary focus of the meeting was regarding the restoration of oil and gas development contracts signed before 2003, when the United States led the invasion of Iraq.

Al-Maliki was supportive of Russia's role in developing his country's energy resources, as well as helping to rebuild Iraq's energy grid by constructing power plants and pipelines. "We are seeking to attract Russian companies to the Iraqi market and involve them in various projects," he said at a news conference following negotiations.

Russian President Dmitry Medvedev
Image: Presidential Press and Information Office.

A more controversial issue has been the reestablishment of energy agreements canceled during Saddam Hussein's regime, before Iraq was invaded. Of particular interest was the Russian oil company Lukoil, whose US$3.4 billion contract was nullified by Iraq in 2002. Saddam's government claimed the company had not fulfilled its contractual obligations in developing the West Qurna-2 oilfield.

Russian Energy Minister Sergei Shmatko said the leaders agreed "in principle" to restore these pre-war contracts, but did not mention specifics. Iraqi officials had previously maintained that the Lukoil contract was invalid, but they had invited Lukoil and other foreign companies to bid for a new contract. On Friday, al-Maliki agreed not to discriminate against Russian companies, promising not to give special preferences to other nations when considering future contracts.

The West Qurna-2 oilfield is believed to be extremely productive, with reserves of up to 7.3 billion barrels and an expected production peak of 700,000 barrels per day, according to Russian estimates. Russia agreed to forgive nearly $13 billion of Iraqi debt in February 2008, which was widely seen as an attempt to support Russian bids for Iraq's oilfields.

Putin, an opponent of the 2003 invasion, spoke positively of recent political developments in Iraq. "We take the view that the situation is becoming more and more sustainable," Putin said. "This concerns security and the domestic political situation." He and al-Maliki signed a joint communique calling for greater cooperation in issues such as terrorism, drug trafficking and arm dealing. The document also praised the agreement on the pullout of foreign forces from Iraq.