Russia to lose out on postwar Iraqi oil

  • 2003-04-03
  • Marielle Eudes

Russia can forget about its oil interests in Iraq, as Washington and London will cut Moscow out of any postwar carve-up of the world's second largest crude reserves, a Russian oil chief said on March 28.

"We're clearly going to have to cut our losses on anything we have there and anything we could have had," the head of the Russian state-run oil firm Zarubezhneft, Nikolai Tokarev, told the daily Vremya Novostei.

"The Americans haven't gone into this war intending to share with anyone. It's a war trophy," he said.

The United States "has sufficient potential, including financial, to exploit Iraqi deposits themselves," he added,

Analyst Sergei Rogov of the U.S.A.-Canada Institute agreed that there was no point in rushing to try part of postwar Iraq's oil wealth. "We won't get even a breadcrumb," he said.

Moreover, "as far as oil contracts as concerned, Russian firms don't have the capital or technology needed to develop Iraqi oil fields, they would have needed Western firms in any case," he told reporters.

Iraq possesses the second largest oil deposits in the world after Saudi Arabia.

The U.S. ambassador to Moscow offered assurances on March 28, telling the daily Nezavisimaya Gazeta that Washington would "seek ways of respecting Russian economic interests (in Iraq) in the framework of joint work with the U.N. or other organizations."

But Alexander Vershbow warned that the United States "can offer no guarantees, because we will not be able to dictate the attitude of the next Iraqi government."

Tokarev estimated his own firm's "concrete losses" in Iraq at $150 million (140 million euros)- $180 millions , not counting lost revenue from subsequent projects.

"We were on to some huge deposits, irrigation projects, a whole lot of things apart from the oil sector," he said.

LUKoil, Russia's top oil company, which saw a lucrative contract with Baghdad canceled last December following reports that the oil firm was in contact with exiled opposition groups, is unlikely to receive any favorable treatment, Tokarev said.

"No one is going to ask them (the Iraqi opposition) who is going to work there. There will be a puppet government, and the United States and Britain will themselves carve up the cake," he said,

Tokarev said it was "obvious" the main object of the U.S.-led war was to control Iraqi oil reserves.

As for Iraq's $8 billion debt to Iraq, "neither [Iraqi President] Saddam [Hussein] nor the regime that replaces him will pay our debts back. The economic reconstruction of the country will absorb all resources," Rogov predicted.

Further economic losses would be caused by a sharp fall in oil prices if the war were to be ended quickly, he added. Russia is a major oil exporter and relies heavily on energy taxes for its budget revenues.

In Paris, meanwhile, Finance Minister Alexei Kudrin warned that any cancellation of Iraqi contracts signed by Russian oil companies would be in breach of international law.

"Russian companies signed contracts in Iraq under international law, and I know that American legal firms helped write these contracts. So I would like to know how these contracts could be questioned," he said following a meeting at the Organization for Economic Cooperation and Development.

He added that he expected any new government in Iraq to honor the country's debt commitments to Russia.

Moscow has maintained important trade ties with Baghdad since Soviet times, and Russian oil companies have invested more than $1 billion in the Iraqi oil industry since 1996, although they have been unable to develop fields mostly because of U.N. sanctions.