Reuters: Iraq moves to nationalise oilfield owned by Russia's Lukoil After US sanctions

Iraq’s cabinet has approved plans to nationalise operations at the West Qurna 2 oilfield, one of the world’s largest, as the government seeks to prevent disruptions caused by U.S. sanctions on Russian stakeholder Lukoil.

State-run Basra Oil Company will take over the oilfield’s operations for 12 months, two company officials told Reuters.

“We aim to keep production running smoothly as Iraq navigates uncertainty over U.S. sanctions and will look for potential buyers for Lukoil’s stake during the 12-month period,” one official said.

Lukoil declared force majeure at West Qurna 2 in November after sanctions were imposed alongside fellow Russian oil producer Rosneft, part of the U.S. push to pressure Russia over the Ukraine conflict.

The sanctions have attracted interest from about a dozen investors, including Exxon Mobil, Chevron, and private equity firm Carlyle.

An Iraqi oil manager at the field said Basra Oil Company will cover local staff salaries, operational costs, and payments to subcontractors using an account linked to the Majnoon oilfield. Production remains steady at around 465,000 to 480,000 barrels per day.

The government said the cabinet had agreed to seek approvals to finance operations through the Majnoon oilfield account, to be supplemented by proceeds from crude shipments sold by state oil marketer SOMO.

Lukoil’s 75% stake in West Qurna 2 is its largest foreign asset. The company has until January 17 to sell its overseas assets under the latest U.S. Treasury deadline. The field represents about 0.5% of global oil supply and 9% of Iraq’s output, making Iraq OPEC’s second-largest producer after Saudi Arabia.

By Khagan Isayev