10-14-13 5:44 AM EDT | Email Article
   By Wayne Ma 

BEIJING--One of China's largest oil companies is still unable to participate in projects in central and southern Iraq four years after it acquired a project in northern Kurdistan.

China Petrochemical Corp., also known as Sinopec, held talks with Russia's OAO Lukoil Holdings (LUKOY) about jointly developing the West Qurna-2 oil field in southern Iraq, Lukoil's chief executive Vagit Alekperov said Monday. "Unfortunately, the Iraqi government didn't confirm joint work with Sinopec," Mr. Alekperov said at a news conference.

Sinopec didn't immediately respond to a request for comment.

Lukoil is the sole operator of West Qurna-2, which holds an estimated 13 billion barrels of recoverable reserves. Lukoil originally signed a contract in 1997 to develop the field but was expelled from the country in 2002. The field is expected to begin producing 150,000 barrels a day by the end of the year.

A lack of a deal on West Qurna-2 is a setback for Sinopec, which has been on a mission to boost overseas oil production amid growing demand at home. Sinopec has previously said it plans to more than double its share of output from overseas projects to more than 50 million metric tons of oil equivalent a year by 2015 from 22.8 million tons in 2011.

State-owned Sinopec has been unable to secure projects in central and southern Iraq since 2009, when it purchased Switzerland's Addax Petroleum Corp. for 8.27 billion Canadian dollars ($8 billion). At the time, Addax was China's largest-ever overseas acquisition by value.

Addax had an oil contract with the semiautonomous Kurdistan Regional Government in northern Iraq, which angered the central government in Baghdad. Shortly after Addax was sold, the Iraqi oil ministry warned Sinopec that it would be barred from taking part in Iraq's second licensing auction to develop its oil fields.

Sinopec said Addax produced 8.5 million tons, or about 170,000 barrels a day, of crude oil last year. That equates to almost 30% of Sinopec's overseas output in 2012.


--Hassan Hafidh contributed to this article.


Write to Wayne Ma at wayne.ma@dowjones.com


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October 14, 2013 05:44 ET (09:44 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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