Statoil set to sell West Qurna 2

Statoil holds a minority 18.75% stake in the development contract at West Qurna 2, where Baker Hughes has commenced drilling.

Statoil is preparing to bail on Iraq, selling its minority non-operator stake in the West Qurna 2 field development contract to operator Lukoil, reports AFP.

The deal has been approved by Iraq’s Oil Minister, reports AFP, citing an unnamed oil official. The terms of the prospective deal are not known.

Statoil holds an 18.75% interest in the 20-year technical services contract, with Lukoil holding 56.25% and Iraq’s national Oil Company the remainder.

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Lukoil and Statoil won the deal in the second auction of oilfield development contracts in December 2009. After expenses the contract offers just $1.15 gross of tax per barrel for oil produced over a set quota, the lowest margin of any field development contract yet awarded.

West Qurna 2 is a 13 billion barrel green field which is not yet producing any oil. By 2017 Lukoil aims to have developed 1.8 million barrels per day of production capacity at the field. The field is slated to produce 150,000 barrels a day (bpd) from 2013, reaching 400,000 bpd in 2014 as the central processing facility is brought on stream.

Lukoil has already awarded the drilling and completion package to Baker Hughes, which is to drill 23 wells at the field. According to the executive quoted in the Dow Jones report, the first well is underway.
The Russian oil giant is also on the cusp of awarding EPC contracts for onsite facilities, with Saipem , SNC Lavalin, Punj Lloyd, Globalstroy and South Korea’s Samsung Engineering all in the running.

Statoil declined to comment on the report.