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LUKOIL WORKING OUT TERMS FOR MORE PRODUCTION IN IRAQ
4/29/15
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.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
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4/29/15
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.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
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