Lukoil partnered with Inpex of Japan for the winning bid on a 5,500 square kilometer block on the very last day of the Iraqi auction. The block is in the south of Iraq.
Iraq had expected more bidders for the auction but the terms were not all that attractive to most oil companies. During the two day auction only 3 out of a total of 12 blocks were awarded.
Many oil companies thought that the risk in unexplored areas was high. As well Iraq is politically unstable.
Lukoil in tandem with Norway's Statoil and the Iraqi national oil company won a contract in 2009 to increase production in West Qurna 2 which has estimated reserves of 12.9 billion barrels. Lukoil now holds a 75 per cent interest as the Norwegian company sold its share to its Russian partner.
The deals that Iraq is offering foreign companies are technical service agreements. The oil companies are paid a fee of so much a barrel. In the West Qurna 2 after all expenses are paid Lukoil will receive only $1.50 per barrel. Any oil produced in the new bloc will fetch $5.99 a barrel. Given the price of oil even this is not all that much. For more see this article. Pakistan Petroleum also won a block and the first block to be award went to Kuwait Energy.