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Iraq averted an annual loss of more than $12 billion by quickly deciding to transfer one of its largest oilfields to a national company after Lukoil’s decision to quit the field.
The Russian oil giant told Baghdad in November last year that it was ending its 75 percent stake in West Qurna 2 oilfield due to crippling US sanctions associated with Russia’s war against Ukraine.
“The swift decision by the government to transfer operations to Basra Oil Company (BOC) allowed the country to avert a loss of more than $12 billion that could have been incurred if West Qurna 2 stopped operating …the field produces around 480,000 barrels per day (bpd), nearly 15 percent of Iraq’s total crude exports,” BOC’s director general Bassim Al-Shamkhani, told the state daily Alsabah.
He said the decision does not constitute a new service contract for the field, but rather represents a "transition process to ensure the continuity of oil production operations during the transitional phase."
“This decision allows BOC to assume the role of operator temporarily, in cooperation with a consortium of the Italian company Bonatti and the Iraqi Basra Crescent company, both of which were previously contracted with Lukoil, until an agreement is reached with an international oil company to take over operations in the medium term,” he said.
Al-Shamkhani also revealed that Lukoil has sent a letter to the Iraqi oil ministry stating its inability to pay contractors and staff due to US sanctions.
In December, the oil ministry issued an invitation to several major US companies operating in Iraq to submit bids for managing the southern West Qurna 2 Field.
Direct negotiations were underway with the invited companies, which will be allowed to submit offers and compete openly, the ministry said.
Transferring the field’s management to a US operator will support Iraq's production stability, protect its market share, and ensure the continuity of state revenues, it added.
(Writing by N Saeed; Editing by Anoop Menon)
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