December 5, 2002	Thursday	Ramazan 29,1423

MOSCOW, Dec 4: China and Russia want to join forces to safeguard oil interests in Iraq if the US invades and topples Iraqi leader Saddam Hussein, a top Russian industry official said on Wednesday.

The official said the neighbouring states have agreed to cooperate to protect their interests against Washington once Iraq’s huge oil reserves are opened to foreign investment under any new Iraqi administration.

“Obviously, no agreement has been signed on the issue, but there were a number of discussions, including, as far as I know, between the leaders of the two states,” said the source, who accompanied President Vladimir Putin to Beijing this week.

He said that if Saddam were ousted “it was agreed that closer economic and diplomatic coordination was needed to restrain unfettered US power in Iraq”.

Russia is concerned that if Saddam is forced from power, oil development contracts signed by the Iraqi government with Russian firms may be torn up by a future US-installed administration.

Members of the Iraqi opposition, keen to be part of any new government, have said they will review oil deals signed by Saddam.

One of biggest contracts at stake is a 3.7-billion dollars deal signed in 1997 by Russia’s largest oil firm, LUKOIL, for the right to tap the huge West Qurna oilfield. The field could pump up to 600,000 barrels per day within three years of being launched.

China’s largest oil firm, China National Petroleum Corp, has a deal with Baghdad to develop the Al-Ahdab oilfield, a 700 million dollars project with an anticipated output of 90,000 bpd.

“It is no simple coincidence that (LUKOIL head Vagit) Alekperov was the only Russian oil executive on this trip with Putin, although Russia has a number of other joint energy projects with China,” the source said.

RUSSIA TO WAIT AND SEE: Analysts did not expect Russia to state its position on the oil deals until it becomes clear whether Saddam, a close ally of Moscow since Soviet times, will manage to cling to power.

“Russia is not the main player in Iraq at the moment and it has simply to wait,” said Valery Nesterov from Troika Dialog brokerage.

Paul Collison from Brunswick UBS Warburg said Russia was defending the LUKOIL contract in Iraq to uphold its international image, but added that Iraq’s estimated Soviet-era debt of 12 billion dollars had greater importance for Moscow.

“I think the Soviet-era debt problem stands higher on the Russian agenda. But losing the Qurna contract, even if its production sharing terms seems not to be very good for LUKOIL, would be a major blow to the Russian ego,” he said.

Russia pressed hard for changes before backing last month’s US-sponsored UN Security Council resolution giving Iraq a “final opportunity” to disarm or face a US threat of war.

US President George Bush said last month the United States fully realized that Russia and other countries had economic interests in Iraq that should be taken into account.—Reuters