BAGHDAD (AP) — Norwegian oil firm Statoil ASA is in talks to sell its share in one of Iraq's biggest oil fields to Russia's private oil giant Lukoil OAO, officials said on Wednesday.
If the talks go well, Statoil will be the first western oil company to withdraw from deals signed with Iraq, which boasts of attracting major oil companies to develop its vast but dilapidated resources for the first time after decades of war and sanctions.
Teaming up with Lukoil, Statoil won the rights to develop the 12.88 billion barrel West Qurna Phase 2 field in the southern province of Basra in Iraq's second bidding round in 2009.
Lukoil leads the consortium with holdings of 56.25 percent and Statoil holds a 18.75 percent stake while an Iraqi state oil company keeps the remaining 25 percent.
Statoil spokesman Bard Glad Pedersen said the company has begun the process to transfer ownership of its interest in the field to Lukoil.
Pedersen said the decision was part of a broader evaluation of the company's portfolio.
Iraq's Oil Ministry said it has no objection and is awaiting the official documents for transferring the shares.
"The Ministry of Oil agrees in principle," said Sabah al-Saidi, deputy head of the Oil Ministry's Licensing and Petroleum Contracts Department. "We are waiting the written agreement between the two companies then we will issue our official approval," he added.
"We have no problem with that, on condition that the other company will continue the work as planned and fulfill all its commitments," he said
Although Iraq sits atop the world's fourth-largest proven reserves of conventional crude, about 143.1 billion barrels, decades of sanctions, war, sabotage and neglect have battered the sector.
Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country's energy industry in more than three decades.
Baghdad aims to raise daily output to 12 million barrels by 2017, a level that would put it nearly on par with Saudi Arabia's current production capacity. Many analysts say that target is unrealistic, because of the degraded state of the industry's infrastructure after wars and an international embargo that lasted more than a decade.
Catherine Hunter, an oil expert at IHS Global Insight in London, noted that Statoil has been putting greater focus on drilling in the Arctic. But its Iraq plans could also be motivated by a reevaluation of the risks versus rewards of doing business in the still-unstable country, she said.
"That initial glow surrounding Iraqi prospects ... has somewhat dimmed with the passing of the years. I think this could well be a reflection of that. The operating conditions are still very difficult" and the regulatory framework remains uncertain, she said.
"There have been complications in getting swift and effective decision-making on the Iraqi side, plus there is the issue of meager rewards to be had" given the operational risks involved, she added.
Associated Press writers Malin Rising in Stockholm and Adam Schreck in Dubai, United Arab Emirates, contributed to this reported.