MOSCOW (WO) — Iraq’s cabinet has approved an agreement with Russia’s Lukoil to transfer oil production operations at the West Qurna 2 field to Basra Oil Company, marking a major shift in management of one of the country’s largest upstream assets.
The cabinet described the deal as an “amicable settlement” covering outstanding invoices and the employment of foreign personnel, as verified by an external auditor. It also stated that taxes on foreign employees’ pay will be treated as final revenue for the state treasury.
Earlier this year, the cabinet approved transferring management of West Qurna 2 to Basra Oil Company under the terms of the existing service and development contract. Authorities also approved financing oil operations through the Majnoon field account, which is to be supplemented by revenues from crude marketed by SOMO.
West Qurna 2 currently produces about 460,000 bpd, representing nearly 0.5% of global oil supply. The field holds initial recoverable reserves of approximately 14 Bbbl and had been expected to ramp up production to 800,000 bpd.
The field has been developed under a 25-year technical service contract signed in January 2010. Lukoil holds a 75% stake, while Iraq’s state-owned North Oil Company owns 25%. Lukoil has financed the project’s capital expenditures and receives reimbursement through a share of oil production, along with remuneration tied to a $1.15-per-barrel fee and profit tax obligations.
In October 2025, following UK and U.S. sanctions, Lukoil declared force majeure on the West Qurna 2 contract and announced plans to divest its international assets. According to prior media reports, the U.S. administration has favored a sale of those assets to an American company, narrowing the potential buyer pool.
Iraq’s Oil Ministry has reportedly approached several leading U.S. producers regarding a potential transfer of Lukoil’s stake. Chevron Corp. has expressed interest in the field but would seek revised contract terms before proceeding, according to Reuters.
In late January, Lukoil said it had reached an agreement to sell most of its international assets — excluding Kazakhstan — to U.S. investment firm Carlyle Group, while continuing talks with other potential buyers.
The cabinet’s approval formalizes the operational transition at West Qurna 2 as Iraq moves to secure long-term management of a strategic producing asset amid shifting geopolitical and commercial pressures.
