Russia-Iraq tension over oil

  • From: "" <muslim_affairs@xxxxxxxxx>
  • To: news@xxxxxxxxxxxxx
  • Date: Wed, 18 Dec 2002 10:42:32 +0000 (GMT),5478,5685270%255E401,00.html

RUSSIA angrily assailed Iraq overnight for its decision to cancel a major oil 
contract with a top Russian company ? a surprise blow that came amid Moscow's 
push for a political settlement around Iraq.

"Such a move can only be interpreted as running contrary to the friendly 
character of Russian-Iraqi relations and the level of bilateral cooperation in 
different areas," the Russian Foreign Ministry said in a statement. It was 
Moscow's harshest criticism of Baghdad to date. 
Abbas Khalaf, Iraq's ambassador to Moscow, said earlier today that the Iraqi 
government had severed the 1997 contract with Russia's largest oil company, 
Lukoil, because it had failed to start work at the West Qurna-2 field. 
He shrugged off Lukoil's claim that the deal was hampered by UN sanctions 
against Iraq. 
"Lukoil has made no investment whatsoever, it has just signed the contract and 
left," Khalaf said at a news conference, adding that other Russian companies 
had worked in Iraq despite the sanctions. 


The Russian foreign ministry strongly backed Lukoil, saying: "No Russian 
company can violate the sanctions regime." It said the problem cannot be solved 
by unilateral action and urged Baghdad to talk to Lukoil to resolve the 
The ministry said Russia was particularly annoyed by the cancellation after its 
opposition to unilateral US action in Iraq. 
"It evokes bewilderment that the step was taken at the moment when Russia was 
trying to defuse tension around Iraq and striving to solve the Iraqi issue by 
peaceful political means together with other countries," the statement said. 
Russia last month backed the UN Security Council's tough resolution demanding 
Iraq comply with weapons inspectors, but warned the United States against using 
force without explicit UN approval. 
Lukoil vice president Leonid Fedun described Iraq's decision to break the 
contract with his company as "an attempt to somehow influence or even punish 
the Russian side for its, as Iraq sees it, failure to prevent the UN Security 
Council from voting on sending weapons inspectors to Iraq," the Interfax news 
agency reported. 
Khalaf flatly rejected allegations that the decision had anything to do with 
politics. He said he was aware of reports that the company was talking to the 
United States in a bid to secure its interests in Iraq if Iraqi leader Saddam 
Hussein is ousted, but refused to comment. 
US President George W Bush has assured Russian President Vladimir Putin that 
Russia would be a major player in rebuilding a postwar Iraq - a promise 
intended to quell Moscow's fears that a new Iraqi government might renege on 
Baghdad's $US7 billion ($A12.4 billion) Soviet-era debt to Moscow and snub 
Russian firms in favour of US and other Western companies. 
Lukoil said on Thursday that it had received a letter signed by an Iraqi deputy 
oil minister that said Iraq was breaking its contract with Lukoil and two other 
Russian companies, Zarubezhneft and Mashinoimport, to develop the West Qurna-2 
Khalaf said today that Baghdad had only severed the contract with Lukoil, while 
the other two companies were still invited to continue their work. 
Lukoil's Fedun said Lukoil would likely go to court if Iraq implements its 
decision. He said the contract stipulated that a party to the deal can withdraw 
from it only if authorised by an arbitration court in Geneva. 


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