Chevron has signed an agreement with Iraq’s Basrah Oil Company to develop the giant West Qurna 2 oilfield, replacing Russia’s Lukoil after its withdrawal from the project under US Treasury sanctions.
The agreement will allow for the exchange of confidential data and sets out a framework for a period of exclusive negotiations between Chevron and the Iraqi state-owned company over the project, Chevron said.
The signing ceremony at Baghdad’s Presidential Palace was overseen by Iraqi Prime Minister Mohammed Shia Al Sudani and senior US officials, including Tom Barrack, US ambassador to Turkey and special envoy to Syria and Iraq, and charge d’affaires Joshua Harris. It underscored Washington’s backing for the transfer of one of Iraq’s most strategic oil assets from Russian to US purview.
The agreement for West Qurna 2, Iraq’s second-largest oilfield, requires approval from the country’s Council of Ministers. Further steps are also subject to additional clearances, including from the US Treasury’s Office of Foreign Assets Control, Chevron said.
The two sides also signed agreements covering the development of four exploration blocks at the Nasiriyah field in Dhi Qar province in Iraq’s south, and the Balad field in Salahuddin province, north of Baghdad, the Iraqi government said.
The Chevron agreement comes against a backdrop of stringent US sanctions that have reshaped control of Iraq’s giant West Qurna-2 oilfield.
The field, one of the world’s largest with estimated recoverable reserves of about 14 billion barrels and output of roughly 460,000–480,000 bpd, was long operated by Russia’s Lukoil under a service contract. It accounts for around 9 per cent of Iraq’s crude and about 0.5 per cent of global supply.
After Washington's sanctions against Russian oil companies, Lukoil declared force majeure in November. In Janurary, Iraq moved in to take operational control through the BOC to avoid any production disruptions.
A subsequent settlement with Lukoil cleared the way for the transfer of operations and has triggered interest from international majors,
Earlier this month, Basra Oil Company awarded a six-month contract, renewable once, to Italy’s Bonatti and local contractor Hilal Al Basra to support operations at West Qurna 2, according to a February 2 letter sent to Lukoil and seen by The National.
Sustaining development at West Qurna 2 is central to Iraq’s ambition to lift crude production capacity to 6 million barrels a day by 2029. Iraq is Opec’s second-largest producer.
Last month, Lukoil agreed to a conditional sale of certain overseas assets to US private equity group Carlyle, a transaction subject to regulatory approvals, including clearance from the US Office of Foreign Assets Control, and excluding its holdings in Kazakhstan.
The Russian company also retains a 60 per cent stake in Iraq’s Block 10 (Eridu) and a 50 per cent interest in Egypt’s West Esh El Mallaha fields.
Russian energy groups have faced mounting operational and financing constraints overseas since Moscow’s invasion of Ukraine, amid widening sanctions and compliance risks.
