Iraq Signs Oil Exploration Deal with Lukoil and Inpex

Iraq just signed a contract with Lukoil of Russia and Inpex of Japan for oil exploration in an area thought to contain vast amounts of petroleum resources, reflecting the most recent step in the efforts of Baghdad to strengthen its role as a main supplier of energy worldwide.

The contract requires the two companies to invest a minimum of $100 million for oil exploration in the block with an area of 2,100 square miles that covers the provinces of Dhi Qar and Muthanna, in the southern part of Iraq.

The deal represents the continuation of oil exploration work which ceased in 1970s, according to Abdul Mehdi al-Amidi, the contracting and licensing department head of the oil ministry. Because of the lost decades, it will take significant investment in oil production infrastructure to get the country caught up with the modern industry.

The ministry is hoping that the deal will lead to additional oil reserves which Iraq deems as important for its long-term economic goals.

The two companies won the deal in the public auction held last May 30 to 31, consenting to a remuneration amounting to $5.99 per barrel of oil equivalent that will be taken from the block later on.

Iraq is aiming to increase its reserves of energy and put itself in the top spot as the main producer of oil and gas worldwide. Moreover, the country has awarded some deals to international companies that will significantly raise their oil exploration and production activities in other nations while discovering fresh energy sources at the same time.

Iraq has proven oil reserves amounting to 143.1 billion barrels and proven gas reserves amounting to 3.2 trillion cubic meters. Both deposits are among the highest worldwide.