The Iraqi cabinet has approved the nationalisation of petroleum operations in the West Qurna 2 oilfield, one of the world's largest.
The move is in accordance with a service contract signed with Russia's Lukoil, the government said on Wednesday.
The cabinet also agreed to seek approvals to finance operations through the Majnoon oilfield account, to be boosted by proceeds from crude shipments sold by the State Organisation for Marketing of Oil.
“The state-run Basra Oil Company will cover local staff salaries, operational expenses and payments to subcontractors, using an account linked to the Majnoon oilfield to help facilitate the process,” said an Iraqi oil manager at the West Qurna 2 field.
Production at West Qurna 2 remains steady at 465,000 barrels per day to 480,000 barrels per day, the official said.
Iraq’s Oil Ministry decided to take over operations to prevent potential production disruptions caused by sanctions on Russia’s Lukoil, said an Oil Ministry official with direct knowledge of West Qurna 2 operations. Lukoil declared force majeure in November at West Qurna 2 as it was hit with sanctions alongside Rosneft as part of US President Donald Trump's push to end the war in Ukraine.
The sanctions have drawn bids from about a dozen investors, including US oil majors Exxon Mobil and Chevron, and private equity firm Carlyle, sources have said.
Lukoil's 75 per cent operational stake in Iraq's West Qurna 2 oilfield was its biggest foreign asset.
The field accounts for about 0.5 per cent of global oil supply and 9 per cent of total output in Iraq, Opec's second-largest producer after Saudi Arabia.
