Russia sidesteps US in bid for Iraq contracts

Russia is making a bold play to enhance its involvement in the reconstruction of Iraq's oil industry despite US insistence that countries opposed to the war be kept out of the lucrative process.

President Vladimir Putin told an Iraqi delegation in December that Russia is prepared to write off up to two-thirds of Iraq's $8 billion debt in return for its fair share of oil contracts.

A Kremlin official emphasised that the deal is far from finalised but that it was willing to examine the question of restructuring Iraq's debt within the framework of the Paris Club of creditors.

"But Russia will look at this issue in a broader context and is willing to take a step towards the Iraqis only if Russian interests are respected, by which we mean the participation of our companies in Iraq's oil sector," he said.

Moscow signed contracts worth billions of dollars with Saddam Hussein to develop Iraq's vast oil reserves but Russian companies' chances of fulfilling these contracts are in doubt because of the country's opposition to the US-led war on Iraq.

Russia's oil giant LUKoil is currently trying to win back rights to the West Qurna oil field that is believed to hold reserves of at least 15 billion barrels of oil.

The old Iraqi leadership tore up the contract last year amid reports that LUKoil was secretly negotiating with the Iraqi opposition in expectation of Saddam's imminent fall.