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Russian plea to Iraq over oil deal
By CNN Moscow Bureau Chief Jill Dougherty
MOSCOW (CNN) -- Russian Foreign Minister Igor Ivanov sent a letter to Iraq asking Saddam Hussein's government to reconsider its decision to cancel its contract with Russia's largest oil company, according to Russia's Interfax news agency. "The message calls on the Iraqi administration to reconsider its earlier decision and to start negotiations to find a mutually acceptable solution to the situation without infringing the rights of the Russian company," Ivanov said during a news conference in Manila, Philippines on Monday, according to Interfax. Ivanov said his message had "rather firm wordings." Last Thursday, Iraq informed Lukoil, Russia's largest oil company, that it was canceling a 1997 contract with Lukoil and its consortium of two other Russian oil companies to develop the West Qurna-2 oil field. The deal was worth a reported $3.8 billion. Iraq's ambassador to Moscow, Abbas Khalaf, said Lukoil had not carried out its responsibilities to develop the field. "It just signed the contract and left," he told reporters. The cancellation applies only to Lukoil, he said, and Iraq continues to count on other Russian oil companies to develop its oil and gas resources. Lukoil, however, said Iraq's decision was based on politics, not economics, and that Baghdad is trying to punish Russia for supporting the U.N. resolution on weapons inspections in Iraq. Lukoil's vice president, Leonid Fedun, said his company may take legal action. Iraq's decision is raising a major row with Russia. A Russian government source said, "If Iraq takes such a decision, then one of the major reasons for Russia to support Iraq in the current international situation disappears ... by himself, Saddam Hussein is not interesting enough for Russia to support him in any situation." Russia has major economic interests in Iraq. Baghdad owes it almost $8 billion in Soviet-era debt and Russian oil companies were hoping to eventually cash in on lucrative contracts to develop Iraq's oil infrastructure. Recently, however, the United States has tried to assure Russia that its economic interests would be protected, even if military action removes Saddam Hussein from office.
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