The big Western oil giants are moving back into Iraq, which has the potential to out-produce Saudi Arabia, and the Russians aren't far behind. A joint-venture of Lukoil of Russia (75 per cent) and Norways's State-controlled Statoil (25 per cent) will develop the West Qurna Phase II project in southern Iraq with estimated reserves of 13 billion barrels of light oil.
Lukoil wanted to bypass the lease auction process and revive an old contract negotiated during the Saddam Hussein era, but was refused. The joint-venture said it will invest several billion dollars in the project - the new field will produce up to 1.8 million barrels daily.
Iraq has already held two auctions of leases and ten development contracts were signed with Western energy firms. Potentially they could quadruple Iraq's oil production to about 12 million barrels daily, equalling Saudi Arabia's present maximum capacity.
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