Russia Will Train Iraqi Oil Workers With Eye on Future Deals By Sergei Blagov CNSNews.com Correspondent July 28, 2004
Moscow (CNSNews.com) - Russia has begun providing assistance to Iraq's oil sector, hoping to revive its once-strong position there, even as the shadow of the oil-for-food program scandal continues to hang over the industry.
A first group of Iraqi oil specialists has arrived in Western Siberia for training at facilities run by Russia's top oil company, LUKoil.
The company said Tuesday it planned to train 100 Iraqi oil workers this year, and another 150 each year between 2005 and 2009. It also plans to provide $5-million dollars worth of humanitarian supplies in 2004-5 to assist the recovery of Iraq's oil sector.
In a statement, the oil giant's president, Vagit Alekperov, said the arrival of the first group was an important step in dialogue with Iraq and a "good start" for future Russian oil projects in Iraq.
Russia, which opposed the war to overthrow Saddam Hussein and has refused to send peacekeepers to help rebuild and secure Iraq, hopes to secure its decades' old oil investments in the country under the new government.
In 1997, Hussein signed a 23-year, multi-billion-dollar contract with a LUKoil-led consortium to develop the West Qurna-2 oil fields, but canceled the deal in February 2003, just before the war.
LUKoil insists that the mega-deal remains valid and hopes to be pumping crude in the country as early as next year.
It signed a memorandum of understanding signed with the Iraqi Oil Ministry earlier this year dealing with rebuilding the industry and training Iraqi workers. At the same time, an "understanding" was reportedly reached over the West Qurna issue.
During a visit to Moscow this week, Iraqi Foreign Minister Hoshyar Zebari said Baghdad would "carefully assess all of our previous agreements with Russian companies" but also said there was "a strong chance" Russia would keep or secure new oil contracts.
The two governments are to appoint representatives to check into all Russian contracts agreed under the previous regime, including those within the framework of the United Nations' oil-for-food program, Zebari said.
The U.N. program is a sensitive issue in Russia because of allegations that Russian entities illegally benefited from a project that was designed to help ordinary Iraqis at a time the regime was targeted by international sanctions.
Earlier this year, Iraqi media alleged that some 40 Russian companies and individuals, including entities linked to the Russian Orthodox Church, the Communist Party and the far-right Liberal Democratic Party, took part in an illegal kickback scheme.
Russian officials and oil companies have denied the claims, which are the subject of a probe approved by U.N. Secretary-General Kofi Annan.
Russia was Iraq's largest supplier under the program. Of the $18.3 billion in oil-for-food contracts approved by the Security Council, some $4.2 billion went to Russia. Eleven Russian oil companies bought tens of million of barrels of oil from Iraq under the deal.
Earlier this month, the Iraqi official heading the investigation into the scandal, Ihsan Karim, was killed in a bomb attack.
Lukoil Hopes Training of Iraqi Oil Men Will Yield Contracts To Work Iraqi Fields Moscow Nezavisimaya Gazeta in Russian 28 Jul 04 p 2
[Report by Petr Orekhin: "Road to Baghdad Goes by Way of Kogalym. Lukoil Hopes That Program To Train Iraqi Specialists Will Help It To Recover Oil Fields in That Country"]
The first Iraqi specialists who will undergo practical training at Lukoil enterprises arrived yesterday in the city of Kogalym in the Khanty-Mansiysk Autonomous Okrug. In this way the memorandum of mutual understanding and cooperation between Lukoil and the Iraqi Oil Ministry, which was signed in Baghdad in March of this year, has begun to be implemented. It is obvious that the company's main interest lies not in teaching the Iraqis something but in persuading the country's new leadership to leave Lukoil with the contracts to work a number of fields which were concluded under the [Saddam] Husayn regime. "I regard the arrival of the first group of Iraqi oilmen at Lukoil for practical training as one more step in the development of our dialogue with the Iraqi side. I am sure that our cooperation in the humanitarian sphere marks a good start for Russian companies to begin implementing oil projects in Iraq," Lukoil President Vagit Alekperov said. At present, however, the fate of these contracts is unknown.
Iraqi Oil Minister Thamir al-Ghadban told RIA Novosti that all the contracts in the oil sphere concluded earlier by foreign companies with Iraq now "are at the stage of being studied and prepared." This concerns Russian companies too. "I hope that it (the decision on the contracts -- Nezavisimaya Gazeta) will be acceptable and will satisfy everyone," the Iraqi oil minister declared.
The existing accords which individual Russian companies have with Iraq (the Lukoil and Oil Ministry memorandum) certainly do not guarantee that their contracts will be confirmed. "The memorandum is a framework agreement and says nothing more," Maksim Shein, chief of the BrokerKreditServis Investment Company's analysis department, told Nezavisimaya Gazeta's correspondent. "Lukoil has not yet invested a single dollar in Iraq, and so it is too soon to speak of its chances in these talks. To sign a cooperation accord is the same as shaking each other's hand but keeping to your own opinion."
At the same time analysts in Russia say that Russian companies do have prospects in Iraq. However, a certain price will have to be paid for them. "In our view the likelihood that projects in Iraq will be restored to Russian companies does exist. But it is linked to a number of political and economic factors," Dmitriy Mangilev, analyst for the Prospekt Investment Company, said. "The possibility cannot be ruled out that Russia will have to grant Western -- primarily US -- oil companies access to certain projects in our country in exchange for Russian companies' access to deposits in Iraq. Maybe the sale of the state's stake in Lukoil, the main contender for which is ConocoPhillips, is such a project and this will enable the Lukoil Company to resume contracts in Iraq."
But for now, instead of developing Iraqi fields, Lukoil will teach that country's specialists. And not just the practice but also the theory of oil work. "The practical training program, which is designed to last a month, provides, in particular, for theoretical and practical lessons in the disciplines of 'modern oil and gas extraction technologies,' 'oil and gas collection and preparation techniques and technology,' 'automation of the technological processes of oil and gas extraction and preparation at production facilities,' and 'equipment for operating oil and gas wells,'" Lukoil's official report points out.
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