Iraq approves agreement with Lukoil on Basra Oil managing West Qurna 2 field
MOSCOW. Feb 18 (Interfax) - Iraq's cabinet has approved an "amicable settlement" with Russia's Lukoil on transferring oil production operations at the huge West Qurna 2 field to the Basra Oil Company.
The agreement particularly concerns invoices and the employment of foreign personnel certified by an authoritative external auditor, the cabinet said in a statement. Tax on the pay of foreign employees must be treated as ultimate revenue for the state treasury, it added.
It was reported at the beginning of January that the Iraqi cabinet had approved transferring management of operations at West Qurna 2 to Basra Oil Company in line with the provisions of a service and development contract.
It was also reported that approval had been received to finance oil operations through the account of the Majnoon field, which is supposed to be increased with revenues from the sale of oil shipped to market by Iraqi marketing company SOMO.
The West Qurna 2 field produces 460,000 barrels per day, or almost 0.5% of the world's total oil output. Production at the field, which has initial recoverable reserves of about 14 billion barrels, was supposed to increase to 800,000 bpd.
The field is being developed under a 25-year service contract that Lukoil signed in January 2010. Lukoil holds a 75% interest in the project and Iraq's state-owned North Oil Company holds a 25%. Lukoil is fully financing expenses for the whole project. After the completion of compensation for historical expenses, the company began receiving full reimbursement for current expenses in the form of a share of oil production. Lukoil is also remunerated in proportion to its stake from the $1.15 per barrel of produced oil due to the project participants and pays profit tax.
After it was hit by UK and U.S. sanctions in October 2025, Lukoil declared a force majeure on the West Qurna 2 contract. The sanctions also forced the company to announce plans to sell its international assets. A key element in this process is that the Trump administration would prefer these assets to be acquired by a U.S. company, which could limit the pool of potential buyers, Bloomberg reported earlier, citing sources.
Iraq's Oil Ministry also planned to approach a number of leading U.S. producers about handing over the Russian company's stake in the field, Bloomberg said. Chevron Corp. is interested in the field, but it would like to change the terms of the contract before buying, Reuters reported, citing sources.
Lukoil announced in late January that it had reached an agreement to sell all its international assets, except its business in Kazakhstan, to U.S. investment company Carlyle Group, but was continuing negotiations with other potential buyers.
