(Adds Lukoil contracts with Enka, Enterpose paragraph five and six, more details from paragraph seven onwards.)
By Jabbar Yaseen and Hassan Hafidh
Iraq and Russia's OAO Lukoil Holding (LKOH.RS) signed Thursday a $998 million deal with South Korea's Samsung Engineering Co. Ltd. (028050.SE) to develop the supergiant West Qurna phase 2 oil field in southern Iraq.
Lukoil and Iraq awarded the deal to Samsung in January to build a central processing facility, or CPF. Work on the facility is expected to take 29 months to complete.
"The central processing facility will be able to produce 500,000 barrels of oil a day from West Qurna-2," said Iraq's oil minister Abdul Kareem Luaiby during the signing ceremony held at the oil ministry's headquarters in Baghdad.
Among the other bidders who lost the deal to Samsung were: Saipem SpA (>> Saipem SpA), Petrofac, SNC-Lavalin Group Inc. (SNC.T) Punj Lloyd Ltd. (532693.BY) and Globalstroy-Engineering (GSEN.RS), company executives said.
Baghdad and Lukoil also signed a contract with France's Entrepose Contracting SA (>> ENTREP.CONTRACTING) and Jordan-registered Rosco to build three storage tanks at Iraq's Tuba crude oil accumulating point near the export terminals, the company said in a statement emailed to Dow Jones Newswires. It gave no price for the contract, but a person familiar with the project said it was some $60 million.
Lukoil also said it signed a deal with Turkey's Enka Insaat ve Sanayi A.S. (>> Enka Insaat ve Sanayi A.S.) to build a 126 megawatt power plant and a gas treatment unit and gas compressors in the field. Again no price was given for the deal, but the person said it would cost some $235 million.
The Russian giant has also chosen a contractor or contractors to build a 105-kilometer-long export pipeline that is expected to cost some $250 million, linking the field with Iraq's export terminals in the Persian Gulf, a Lukoil executive said. "The contract is still awaiting the approval of the Iraqi government," he added.
Lukoil and Norway's Statoil ASA (STO) were awarded a 20-year service contract for West Qurna Phase 2 in Iraq's second licensing round held in December 2009. The companies promised to get the southern field pumping at a rate of 1.8 million barrels a day for payment of $1.15 a barrel.
Statoil however is selling its 18.75% stake in the project to Lukoil, but it is still awaiting formal letter approving the sale from the Iraqi oil ministry, people familiar with the situation said. If the sale is executed, Lukoil's stake in the venture would become 75%, while the remaining stake is owned by the Iraqi state oil company.
First oil production from the field is expected at the end of 2013, officials said. First output of about 150,000 barrels a day will flow in 2013 and then rise rapidly as more wells are tied in, they added.
-By Jabbar Yaseen in Baghdad and Hassan Hafidh in Amman; Dow Jones Newswires; +962 799 831 831; [email protected]