Baghdad moves to localize oversight of major field
The Iraqi cabinet has formally endorsed a restructuring agreement that shifts operational control of the West Qurna 2 oilfield away from Russia’s Lukoil and into the hands of Basra Oil Company. The decision represents a strategic recalibration of governance over one of Iraq’s most significant producing assets.
Officials described the accord as a negotiated resolution covering outstanding financial obligations, expatriate staffing matters and fiscal clarifications. According to cabinet statements, income taxes linked to foreign personnel will now be recorded as final revenues for the state.
Production scale and contractual background
West Qurna 2 is a heavyweight contributor to Iraq’s output, currently delivering roughly 460,000 barrels per day. With estimated recoverable reserves of around 14 billion barrels, the field has long been viewed as a pillar of future supply expansion, with earlier plans targeting production levels approaching 800,000 barrels per day.
The asset has operated since 2010 under a long-term technical service contract. Lukoil held a majority position and financed development spending, recouping costs through allocated production volumes and a fixed remuneration fee per barrel, alongside applicable profit taxes. The Iraqi state maintained minority ownership via its national company.
Sanctions reshape the commercial landscape
Geopolitical developments reshaped the project’s trajectory after Lukoil declared force majeure last year in response to Western sanctions. The company later signaled its intent to exit several overseas ventures, prompting uncertainty about the future ownership of its Iraqi stake.
Discussions have reportedly involved potential U.S. buyers, reflecting broader political considerations tied to asset transfers from sanctioned Russian operators. Among those mentioned in prior reporting is Chevron, which is said to be evaluating prospects while seeking potential revisions to contractual terms.
Financial coordination and transition framework
As part of the transition, Iraqi authorities approved a financing mechanism that leverages accounts associated with the Majnoon field, supplemented by revenues marketed through SOMO. This approach is designed to maintain operational continuity while consolidating management domestically.
Separately, Lukoil disclosed an agreement to divest most of its non-Kazakh international assets to U.S.-based Carlyle Group, while continuing to explore additional options for remaining holdings.
Energy policy amid shifting alignments
The transfer underscores Baghdad’s effort to insulate key energy infrastructure from geopolitical turbulence. By strengthening the role of Basra Oil Company in upstream management, Iraq is positioning itself to exercise tighter oversight of a field that anchors a meaningful share of national production.
As sanctions, capital flows and strategic alignments continue to evolve, the reconfiguration of West Qurna 2 reflects a broader recalibration in global energy partnerships and asset control.
