Iraq terminated the deal on 12 December, claiming Lukoil had done no work on the project since the lucrative $3.7bn contract was signed in 1997.

Russian news agency Interfax quoted diplomatic sources as saying the bone of contention was over Lukoil's refusal to violate a United Nations oil embargo on Iraq "and start investing properly in the project".

The decision comes at a time when Russia is trying to ease tensions around Iraq Russian foreign ministry

The Russian Government has called on Iraq to reconsider the move to scrap the deal on developing the huge oil fields in Iraq's West Qurna region.

A Russian foreign ministry statement expressed "bewilderment" that Baghdad's decision came "when Russia is trying to ease tensions around Iraq".

Daily Nezavisimaya Gazeta reported that Kremlin officials were complaining about the "thanks" Moscow was getting for its efforts to protect Baghdad from a US military strike.

It quoted commentators as saying the move could impede Russian political support for Iraq at a critical juncture.

Calling the decision a litmus test revealing the fragility of relations, the daily said that if it was not reversed, Moscow had one more reason to "write off" Saddam Hussein.

Baghdad's move is monstrously counterproductive Sergey Karaganov

Mikhail Margelov, the chairman of the Federation Council International Affairs Committee, said the move had revealed that all decisions in Iraq were made by one person.

"Now, when we are monitoring the observance of UN Security Council Resolution 1441 by Iraq, we should understand with whom the international community is conducting dialogue and whose opinion determines Iraq's political and economic decisions."

The daily Vedomosti quoted Sergey Karaganov of the Foreign and Defence Policy think tank describing Baghdad's move as "monstrously counterproductive".

He said it deprived Moscow of any interest in preventing the fall of the current government.

But an analyst on the government-owned website stana.ru downplayed the significance of the current Iraqi Government's decisions, as "regime change is extremely likely".

Nezavisimaya Gazeta went further and suggested that Lukoil might even benefit in a post-war era if it presented itself as a "victim" of the current regime.

BBC Monitoring, based in Caversham in southern England, selects and translates information from radio, television, press, news agencies and the internet from 150 countries in more than 70 languages.