Iraq plans to nationalize West Qurna 2 oilfield operations: gov't

BAGHDAD,— Iraq’s cabinet has approved a plan to nationalize operations at the West Qurna 2 oilfield for one year, a move aimed at preventing disruptions after U.S. sanctions targeted Russian oil company Lukoil, officials said.

State-run Basra Oil Company will manage the oilfield for 12 months, two company officials told Reuters.

One official said the government wants to ensure production continues without interruption and will explore potential buyers for Lukoil’s stake during the temporary takeover.

Lukoil, which declared force majeure in November at West Qurna 2, was hit by U.S. sanctions alongside Russian rival Rosneft. The sanctions were part of a U.S. effort to pressure Russia over the conflict in Ukraine.

According to sources, at least a dozen investors, including Exxon Mobil, Chevron, and the private equity firm Carlyle, have expressed interest in acquiring a stake in the oilfield.

An Iraqi oil manager at the field told Reuters that Basra Oil Company will cover local staff salaries, operational expenses, and subcontractor payments using funds routed through an account connected to the Majnoon oilfield to facilitate operations.

Production at West Qurna 2 remains stable, averaging 465,000 to 480,000 barrels per day, the official added.

In a statement on Wednesday, the Iraqi government said the cabinet approved using proceeds from crude shipments sold by state oil marketer SOMO, credited to the Majnoon oilfield account, to finance the nationalized operations.

Lukoil holds a 75% operational stake in West Qurna 2, its largest foreign asset. The company faces a January 17 deadline from the U.S. Treasury to sell its overseas holdings.

The field produces about 0.5% of the global oil supply and roughly 9% of Iraq’s output. Iraq is the second-largest oil producer in OPEC, behind Saudi Arabia.

(With files from Reuters)