Iraq Nationalizes Operations at West Qurna-2 Oil Field

The Iraqi government has officially decided to nationalize operations at the West Qurna-2 oil field, which is primarily owned by the Russian company Lukoil, holding a 75% stake. This move comes in response to U.S. sanctions imposed on Lukoil and aims to ensure uninterrupted oil production amidst the associated uncertainties. The management of the field will be transferred to the state-owned Basra Oil Company for a period of 12 months.

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West Qurna-2 is one of the largest oil fields globally, contributing approximately 0.5% of the world's oil supply and about 9% of Iraq's total oil production. Lukoil has been involved in the development of this field since 2009, with commercial production commencing in 2014. The nationalization follows Lukoil's declaration of force majeure in November 2025, after the Iraqi government halted payments to the company due to the sanctions.

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Under the nationalization plan, Basra Oil will manage day-to-day operations, including payroll, operational costs, and subcontractor fees, funded through an account linked to the Majnoon oilfield. This account will be replenished by revenues from crude oil exports marketed by the State Organization for Marketing of Oil (SOMO). Current production levels at West Qurna-2 remain stable, ranging between 465,000 and 480,000 barrels per day.

Iraq Moves to Nationalize West Qurna 2 Oilfield Operations

The Iraqi government plans to seek potential buyers for Lukoil's stake in the West Qurna-2 field within the year. Industry sources indicate that major oil companies, including ExxonMobil and Chevron, have expressed interest in acquiring the controlling stake. The urgency of this process is underscored by a U.S. deadline requiring Lukoil to divest its foreign assets by January 17, 2026.

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While the nationalization aims to stabilize production, critics may argue that such a move could deter foreign investment in Iraq's oil sector, particularly from Western companies wary of political instability and government intervention. The long-term implications for Iraq's oil industry and its relationships with foreign investors remain to be seen.

Iraq to nationalize Russian-run West Qurna 2 oilfield

An Iraqi oil manager stated, "The decision to assume control was taken to avert production disruptions linked to international sanctions on Lukoil." The Iraqi government has emphasized that this action is necessary to maintain oil output and ensure economic stability.

Iraq Moves to Nationalize West Qurna 2 Oilfield Operations

• “One of them said that the decision was aimed at ensuring uninterrupted oil production amid uncertainty related to US sanctions, as well as finding potential buyers for Lukoil’s stake during this period.” — Iraqi Oil Manager

Nationalization in Iraq: how Lukoil lost its largest foreign asset

The nationalization of the West Qurna-2 oil field marks a significant shift in Iraq's approach to managing its oil resources, particularly in the context of international sanctions affecting foreign companies. As the Iraqi government navigates this transition, the focus will be on maintaining production levels and attracting potential buyers for Lukoil's stake in the field.

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