U.S. Asks Russia for Aid on Iraqi Oil
By Dmitry Zhdannikov Reuters U.S. oil firms in Iraq have had to ask for Russian help to rebuild an oil infrastructure that was dominated by the Soviet Union for decades, the head of Russian state firm Zarubezhneft said Friday.
"American companies have weighed up their capabilities and come to the conclusion they can't do without us," Zarubezhneft president Nikolai Tokarev said in an interview.
Tokarev said Zarubezhneft, which has significant interests in Iraq, are poised to return to the gulf state as contractors when political stability allows.
But he was skeptical of chances for big exploration deals.
Zarubezhneft has had talks with the second-largest U.S. oil firm, ChevronTexaco, Tokarev said, as well as the world's biggest land-based drilling contractor, Nabors Industries, and a number of other U.S. oil service firms.
"They would like to see us as their partners, which shows that common sense is finally prevailing," he said.
"Iraq bought energy equipment mainly from the Soviet Union and Russia. You cannot quickly replace it. Those who are involved in the industry today say that nothing can be changed quickly without Russian involvement," he said.
Zarubezhneft has been working in Iraq since 1967 and believes it knows the country better than any other Russian or Western firm.
In Soviet times, it helped launch the key 1 million barrel-per-day Rumaila field in Iraq's southeast.
More recently, Zarubezhneft hoped to boost its presence there by developing the giant West Qurna field with oil major LUKoil.
But Baghdad scrapped that deal in the twilight months of president Saddam Hussein's rule amid rumors that LUKoil was seeking guarantees from the United States in the event of his removal.
A U.S.-led invasion toppled Hussein last April but more than a year's occupation has failed to stabilize Iraq, which possesses the world's second-largest crude oil reserves.
Days before Hussein's fall, Tokarev said Russian firms would lose everything in Iraq as the United States would squeeze all its rivals out of the region.
He also said the world should not count on the quick rehabilitation of Iraq's oil industry and predicted that "suicide bombers" would turn the country into "bloody chaos."
"I am saddened that all my predictions turned out to be true," he said on Friday.
"I will refrain from more predictions today, as Iraq's prospects look very bleak," he said.
He doubted Iraqi oil output could reach a planned 5 million or 6 million bpd in the foreseeable future, as it would cost billions of dollars just to maintain output at the current levels of 2 million bpd to 3 million bpd.
Russian firms' odds of securing massive oil reserves in Iraq were long despite LUKoil's recent attempt to revive the Qurna issue by sending a high-level delegation to Baghdad.
"Some legal chances to keep Qurna still exist but the way the situation is developing in Iraq is very disappointing," he said.
Tokarev said his employees in Iraq spent last year trying to contact Iraqi government officials on the future of the firm's contracts, but their efforts were largely unsuccessful.
"What they need today is to drill, drill and drill for oil. They need spare parts, specialists. They have a deficit of everything. They are asking us for help, but unfortunately don't say anything about the financial side of these deals," Tokarev said.
Zarubezhneft recalled its specialists from Iraq in April amid security concerns after workers from energy equipment firm Interenergoservis were kidnapped.
Tokarev said he would send his team back as soon as the situation improved, but added that he doubted that cash-rich Russian firms would be rushing to an unstable Iraq if security fears kept Western majors out.
"The costs of workforce insurance is a sobering thought for any chief executive," he said.
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