- The Washington Times - Tuesday, December 17, 2002

MOSCOW (AP) Russia yesterday demanded that Baghdad open talks to resolve a dispute about a canceled contract with Russia's largest oil company.

During a visit to Manila, Russian Foreign Minister Igor Ivanov said he had sent a message requesting that the Iraqi leadership reconsider its decision to break the 1997 contract with Lukoil and open negotiations, the Interfax news agency reported.

The negotiations should be aimed at finding "a mutually acceptable settlement of the situation, which does not damage the interests of the Russian company," Mr. Ivanov was quoted as saying. He said the message was "toughly worded," Interfax reported.

Last week, Lukoil said it had received a letter signed by an Iraqi deputy oil minister that announced Iraq was breaking its contract with Lukoil and two other Russian companies, Zarubezhneft and Machinoimport, to develop the West Qurna-2 field.

Iraq's ambassador to Moscow, Abbas Khalaf, said Sunday that Baghdad severed the contract because Lukoil had failed to start work at the West Qurna-2 field.

He dismissed Lukoil's argument that it was hampered by the U.N. sanctions on Iraq, saying other Russian companies had worked in Iraq but only the contract with Lukoil had been canceled.

Lukoil had a 68.5 percent share in the $20 billion project, according to the Itar-Tass news agency. The two other Russian companies each had 3.25 percent, and Iraq's Oil Ministry had 25 percent.

Iraq's relations with Russian oil companies have seemed to shift with Russia's actions in the U.N. Security Council, where it has been Baghdad's biggest supporter since the 1991 Gulf war, seeking to secure the removal of the sanctions.

While Russia still says it hopes sanctions can be lifted, it voted last month to approve the U.S.-backed resolution demanding that Iraq comply with U.N. weapons inspectors or face serious consequences.

President Bush has assured Russian President Vladimir Putin that Russia would be a major player in rebuilding a postwar Iraq a promise intended to quell Moscow's fears that a new Iraqi government might renege on Baghdad's $7 billion Soviet-era debt to Moscow and snub Russian firms in favor of U.S. and other Western companies.

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