On Christmas Eve, the oil arm of Russian energy giant, Gazprom Neft, initialed a contract with the Iraqi government to develop the Badra oilfield in the south of the country. On December 29, Russia's second-largest crude producer by output, LUKoil, will sign a framework agreement with the Iraqi Oil Ministry on the development of Iraq's largest oilfield, West Qurna 2.

Badra, in eastern Iraq near the Iranian border, has reserves of 109 million barrels (bbl) of oil. West Qurna is believed to hold 11-15 billion bbl of recoverable reserves and have a production potential of 0.8-1.0 million barrels per day (bpd).

Russian companies invested huge funds in Iraq in the late 1990s, and the auctions the Iraqi government has recently held show that the United States and Britain have not taken over all of its oil reserves, as some experts thought they would.

The oil situation in any country, but especially in Iraq, always has geopolitical and geo-economic sides to it. If not for this, the outcome of the December round of oil auctions in Iraq (the first one was held in November) would have been a sensation.

Unfortunately, each barrel of Iraqi oil, even if not produced yet, includes many negative elements, especially for oil producers. The OPEC countries are dismayed at Iraq's oil revival, and even the oil companies that have gained access to its hydrocarbons reserves are not entirely happy.

The only exception is China, which is not interested in the amount of oil it can produce in Iraq but is happy that is has gained access to the Iraqi oil and hopes that it will get it cheaper.

Iraq's prospected reserves have been estimated at 118-120 billion barrels (bbl) and are the third largest in the region after Saudi Arabia and Iran. According to the U.S. Department of Energy, Iraq's total oil reserves may be 300-400 billion bbl with production costing $1 per bbl. The Americans have calculated that if the average OPEC oil price, which was $71.30 per bbl in late December, falls to $5, Iraq will still benefit from oil production.

Iraq plans to increase oil production from 2.5 billion barrels per day (bpd) now to 12-13 billion bpd within six years. This would propel Iraq from 13th to 4th place on the global list of crude producers, after Saudi Arabia, Russia and the United States.

OPEC is seriously worried by this possibility, while Russia fears it could provoke a stable global depression of oil prices even despite China's rapidly growing oil needs.

Russian oil companies waited more than 12 years to gain access to West Qurna. LUKoil and Zarubezhneft agreed with Iraqi authorities to develop the oilfield back in 1997. But the international community's suspicion that Saddam Hussein had weapons of mass destruction eventually led to an embargo on Iraqi oil exports.

The Russian companies stopped operation in Iraq, which terminated the agreement in 2002 on the grounds that the Russian consortium failed to comply with its provisions. In 2003, the United States invaded Iraq and subsequently established a "democratic" regime there that had no time or patience for the contracts signed during Hussein's rule.

In other words, the return of a Russian company to the West Qurna project can be seen as partial restoration of justice.

The proven reserves of West Qurna's second phase have been estimated at 12.9 billion bbl. The reserves of the first phase, which is being developed by an American-British consortium of Exxon and Shell, are 8.7 billion bbl.

LUKoil has teamed up with Norway's StatoilHydro in an 85%-15% consortium and pledged to increase output at West Qurna to 1.8 million bpd for a fee of $1.15 a barrel.

Gazprom Neft will hold 40% in the Badra consortium alongside Turkish TPAO (10%), South Korea's Kogas (30%) and Malaysia's Petronas (25%).

Exxon, the only U.S. oil major to attend the recent Iraqi auctions, failed to get what it wanted. The British and American media even wrote that the U.S., which has spent over $1 trillion on the Iraq war, has been duped.

However, American companies most likely did not bid for Iraqi oil for pragmatic reasons, strategic considerations and plans of an "oil occupation."

All of the auctioned oilfields are located in southern Iraq populated by Shiites. No foreign company has bid for oilfields in central Iraq where the fields are small and the situation is unstable. The southern Shiite regions are very anti-American. The United States most likely knows that when it starts withdrawing its troops from Iraq the situation in its southern regions will not be favorable for the U.S. oil presence.

This is why the United States has quietly signed agreements with the authorities of the Iraqi Kurdistan, which borders Iran to the east, Turkey to the north and Syria to the west and is said to contain a third of Iraqi oil reserves.

Kurds have pinned their hopes of independence or broad autonomy on the United States, and will therefore give U.S. oil majors a free hand in their territory.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

MOSCOW. (RIA Novosti political commentator Andrei Fedyashin)