Lukoil set to revive $4bn Saddam oil deal

Lukoil, the Russian oil company, is poised to resurrect the $4bn (£2bn) contract it signed with Saddam Hussein's regime to develop one of Iraq's largest oil fields.

The company's US rival Conoco-Phillips will also benefit as it has a stake in the joint venture with Lukoil to develop the West Qurna-2 field, which holds up to 16 billion barrels of oil.

Iraq's long-awaited hydrocarbon law, which will soon be put before the Iraqi parliament, contains a provision that states that existing contracts to develop the country's 115 billion barrels of reserves remain valid, subject to revision. Article 31 of the draft obtained by The Independent on Sunday says: "Any contract made under existing law concerning Exploration and Production of Petroleum in the territory of Iraq shall remain valid."

Lukoil's president, Vagit Alekperov, plans to visit Iraq in the next few weeks as the company continues negotiations with the Iraqi oil ministry. The Russian firm may have to bring in other partners because of the size of the field, which experts say will cost $4bn to develop.

A Lukoil spokesman said that once it is given the official go-ahead, development can begin in three months. "But everything depends on the security situation," he added.