Iraq on Wednesday approved for the state-owned Basra Oil Company to take over operations at the West Qurna-2 oil field in southern Iraq, while awaiting bids from major U.S. oil companies to manage the field currently operated by Russia’s Lukoil, which is subject to U.S. sanctions.
A ministry of oil official told AFP that the move is “temporary until Lukoil’s position is resolved or its stake is sold to another party or company,” noting that the goal is “to ensure that operations at the field, located in Basra province and one of the world’s largest oil fields, are not affected or halted.”
Earlier in December, Baghdad invited major U.S. oil companies to submit bids for managing the field, following the implementation of U.S. sanctions on Russian companies Rosneft and Lukoil, aimed at cutting funding sources for Russia’s invasion of Ukraine that began in February 2022, raising concerns for countries hosting these companies.
Lukoil has managed West Qurna-2 for over a decade. The field currently produces 480,000 barrels per day, representing 10% of Iraq’s total crude oil output and 15% of its exports.
A statement from the Prime Minister’s media office on Wednesday said the caretaker government approved “Basra Oil Company to manage petroleum operations at West Qurna-2, in line with the provisions of the service and development contract.”
The statement added that the government also approved measures to secure the necessary funding for operations through the Majnoon field account, by enhancing it with proceeds from oil sales managed by the State Oil Marketing Organization (SOMO).
A ministry official explained that using this account aims to “ensure financial support for continuing operations at West Qurna-2 after Lukoil’s share exports were disrupted due to U.S. sanctions, which in turn affected operational funding that requires significant expenditures.”
Several Iraqi oil experts told AFP that the main contenders to manage the field are currently Chevron and ExxonMobil.
Chevron signed a memorandum of understanding with Iraq in mid-August to develop four exploration blocks in Nasiriyah in the south, as well as the Bald oil field in central Iraq. ExxonMobil signed a memorandum in October, paving the way for the development of the Majnoon field in the south.
Iraq’s crude oil reserves are estimated at around 150 billion barrels, sufficient to supply global markets for more than 120 years, according to authorities.
As a country that relies on oil for roughly 90% of its revenues, Iraq is OPEC’s second-largest oil producer, exporting an average of 3.5 million barrels of crude per day.
