Iraq intends to replace Exxon with Russian companies – reports

Iraq is reportedly considering replacing US oil major ExxonMobil with Russian companies in the West Qurna-1 project, as the authorities are angered by ExxonMobil’s deal signed with the Kurdistan regional government without Baghdad’s approval.

Baghdad is considering inviting Russia's LUKOIL and Gazprom Neft – both already operating a number of projects in the country, instead of Exxon Mobil to develop the West Qurna-1, Nefte Compass weekly reported on Thursday. With the step Baghdad would signal international companies operating in Kurdistan that it rejects any agreements with the semi-autonomous region’s government, sources in the industry told RT.

Iraqi Prime Minister Nouri al-Maliki has reportedly offered the deal to Russian President Vladimir Putin at the meeting Wednesday, the newspaper said. However, no such offers have been officially announced.

Russia's second-largest oil producer LUKOIL has refrained from comment. But Lukoil sources told RT that the company hasn’t received any official offers. Currently the oil major is developing the West Qurna-2 oil field in partnership with Iraqi state-run North Oil Company after Norway’s Statoil left the project. LUKOIL holds a dominant 75% share.

On Wednesday Gazprom Neft, the oil arm of Russia's top natural gas producer Gazprom, froze two contracts for oil development in the Kurdistan region, according to the Iraqi PM. In August the company signed two production sharing contracts with the Kurdistan Regional Government directly avoiding Iraqi Oil Ministry approval. The company declined to comment, though a source told Reuters that Gazprom Neft is still interested in Kurdistan’s oil.

The Russian oil major is already developing the 300 million barrel Badra deposit near the Iranian border. It holds a 30% stake in the project, along with South Korea's Kogas with 22.5%, Malaysia's Petronas with 15% and Iraq's state-owned Oil Exploration Company with 25% in the project. Production is due to start by 2013.

Iranian export ban forces buyers to line up for Russian crude

As the sanctions against Iran came into force on July 1, many European refineries rushed for Russian Ural crude to fill their stocks, pushing the oil prices up to $100 per barrel.

­Urals is a high sulphur mix of heavy, high-oil of the Urals and the Volga region with light oil from Western Siberia. It has the same quality as Iranian crude, which makes it suitable replacement, experts say.

Many European importers have already replaced Iranian crude with that of Saudi Arabia, Iraq or Kuwait, but those who failed to do it beforehand are buying Urals as it is widely available in the spot market, the Financial Times reports. In January when the sanctions against Iran were discussed, France’s Total and Repsol of Spain also rushed to buy Urals to cut dependency on Iran.

“Russian crude supplies are more secure as they come through a pipeline. Russian exporters provide guarantees,” said Vyacheslav Bunkov, chief analyst at Aton Investment. “Meanwhile the situation in the Gulf could lead to supply disruptions, if military action begins. That’s why Urals became more attractive than Brent”.

Due to the rush Urals is trading 52 cents per barrel over Brent, while it used to trade $1.60 cheaper per barrel in mid-June. Brent prices also rallied supported by seasonal high demand and reduced supply because of Norway’s strike and recent disruption in Libya.

Meanwhile some European companies including Repsol and Cepsa of Spain have also purchased extra Iraqi barrels to replace Iranian crude. European refiners bought about 450,000 barrels a day of Iraqi Basra crude in May, up from an average of 100,000 barrel per day earlier in the year, according to the International Energy Agency.

Transaero buys Sukhoi planes

Russia's second-biggest airline is buying four Airbus A380 superjumbo planes worth $1.7 billion at list prices, and has placed an order for Russian-made Superjet-100s.

­Deliveries will begin in 2015 said Transaero CEO Olga Pleshakova. The long-haul A380 jets can carry up to 700 passengers, will operate on Asian, Central American and European routes, she said.

Transaero also agreed to buy six Sukhoi Superjet-100 planes, with deliveries in 2015-2017, worth $212.4 million, and also signed an option to acquire 10 more.

The plane, built using Western technology, is Russia's first civil aircraft designed after the fall of the Soviet Union.

A Sukhoi Superjet crashed during a demonstration flight in Indonesia last month killing 45 people, which industry experts said could hamper the plane maker's plans to secure more orders.

However, the airliner had no apparent technical problems, United Aircraft Corporation President Mikhail Pogosyan said on Thursday.

“According to the available data… there were no failures in the systems’ operation,” he said, adding that preliminary analysis of the on-board flight recorders has been completed.

Indonesian and Russian officials have confirmed the aircraft experienced no technical problems up until impact, but insisted it was still premature to say if pilot error caused the crash.

(Would YOU fly in a Russian made airplane?)