By Alexander Miller, consultant in energy markets. Eurasia Business News, January 8, 2025. Article n°1981
Iraq’s government has approved a plan to temporarily nationalize operations at the West Qurna-2 oilfield, where Russian oil giant LUKOIL holds a 75% operating stake, to ensure uninterrupted production amid U.S. sanctions on the company.
State-owned Basra Oil will manage the site for 12 months, covering salaries, contractors, and expenses using funds from the nearby Majnoon field, while seeking buyers for LUKOIL’s share by a January 17 deadline.
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West Qurna-2 is one of the world’s largest oilfields, producing about 465,000–480,000 barrels per day, or roughly 9% of Iraq’s total output and 0.5% of global supply.
LUKOIL won the contract in 2009, with commercial production starting in 2014; it declared force majeure in November 2025 after sanctions halted payments.
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Sanctions context
The move follows U.S. sanctions on LUKOIL and Rosneft in late October 2025, tied to efforts to end the Ukraine war, requiring divestment of foreign assets.
Potential buyers include U.S. firms like ExxonMobil and Chevron, plus private equity groups; this mirrors actions in Bulgaria, Romania, and elsewhere to stabilize LUKOIL-linked operations.
Implications
Russia has been actively expanding its oil interests in Iraq, capitalizing on opportunities created by Baghdad’s need to modernize its hydrocarbon sector and boost crude exports. U.S. sanctions inflict damages to the Moscow’s plans.
Iraq retains field ownership under the service contract; this is operational control, not permanent seizure, aimed at production stability.
Output remains steady so far, avoiding market disruptions despite geopolitical pressures.
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© Copyright 2025 – Eurasia Business News. Article no. 1981
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