WEST QURNA STRATEGIES NOT TO CHANGE: LUKOIL HEAD

MOSCOW, September 29 (RIA Novosti) - A new strategic alliance with ConocoPhillips will not change LUKoil policies to implement Project West Qurna 2, though the partners will certainly coordinate it between themselves, Vagit Alekperov, LUKoil president, said to a news conference tonight, after the US company acquired its sizeable block.

The project promises a daily 500,000 barrels within the next three years eventually to reach 600,000, and bring Iraq approximately 45 billion US dollars.

LUKoil and ConocoPhillips will get to the negotiating table with the Iraqi administration to find a confirmation of LUKoil contract rights to work the new oilfield. If the rights are confirmed and the matter duly coordinated with government agencies and the contracting parties, the companies intend to make a supplementary contract, on which ConocoPhillips will receive a 17.5% share on a production-sharing agreement. After that, the LUKoil will retain 51% on Project Qurna, and its Russian-based partners 3.25% each.

A second-stage contract to open up the West Qurna oilfield and drill petroleum was signed March 21, 1997. Iraq's Petroleum Ministry was signatory for the host country, and LUKoil, the Zarubezhneft foreign economic amalgamation, and the government company Mashinoimport Foreign Economic Association for Russia. The production-sharing contract has a 23 year term with prospects to prolong it for another five.

LUKoil has 68.5% on the project, Zarubezhneft and Mashinoimport 3.25% each, and Iraq's SOMO 25%.

The deposit's explored and blocked-out reserves make six billion barrels. 4.8 billion barrels is expected to be extracted while the contract remains valid, plus 56.4 billion cubic meters of casing-head gas. Approximately four billion dollars has been earmarked to invest in project implementation.

Mr. Alekperov next shifted to LUKoil plans for Russia. It intends to invest more than three billion dollars within the next ten years to open up the Timan-Pechora oilfields. "We regard that province as bridgehead for further progress," he remarked.

LUKoil and ConocoPhillips will together work at 16 oilfields. Their first commercial yields are expected for 2007 to increase extraction to a daily 200,000 barrels by 2010, said Mr. Alekperov.

"Does LUKoil intend to buy Yukos assets?" a reporter asked.

"We never consider goods not for sale-presently, at any rate," came the reply.