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Iraq needs to find a replacement of Russia’s Lukoil at one of the OPEC member’s largest oilfields to avert a sharp fall in its crude exports, analysts say.
Lukoil, Russia’s second largest oil producer, seems to be bracing to quit Iraq’s southern West Qurna 2 oilfield following a recent US decision to sanction the company as part of Washington’s drive to halt the Russian-Ukraine conflict.
Last month, Zawya Projects reported that Lukoil accepted an offer from Switzerland-based commodity trader Gunvor Group to buy its international subsidiary. Lukoil participates in projects in Iraq, Azerbaijan, Kazakhstan, Uzbekistan, Egypt, Cameroon, Nigeria, Ghana, Mexico, the UAE and the Republic of the Congo, according to the company’s website.
Lukoil holds a 75 percent stake in West Qurna 2 oilfield while the rest is controlled by the state-owned South Oil Company.
“Should Lukoil quit the field and production be halted, this will deprive Iraq’s crude oil exports from 450,000-500,000 bpd,” an unnamed Iraqi official told Aliqtisad news.
A well-known Iraqi analyst close to the government said reports that Lukoil has declared force majeure in its operations in south Iraq show that the Western sanctions are working and that such a declaration is a “big geo-political triumph” for the west.
“I believe Lukoil’s move will open new opportunities for such western companies as ExxonMobil, BP and TotalEnergies to bolster their presence in Iraq,” said Nabil Al-Marsouimi, an author of several books on Iraq’s energy sector and economy.
“The road now appears clear for any arrangement between Iraq and western companies which are gradually returning to Iraq…I see a good chance for ExxonMobil in West Qurna 2 given its long experience in the nearby West Qurna 1,” he told Zawya Projects.
Early last year, ExxonMobil quit West Qurna 1 and handed its operations to PetroChina as the lead contractor as part of a plan to phase out its presence in Iraq for security and contractual reasons, including unattractive project terms offered by Baghdad.
The company is set to return to Iraq after it signed a heads of agreement (HOA) with Baghdad in October 2025 for the development of the southern Majnoon oilfield, one of the world’s largest single crude reservoirs.
“Iraq needs to find a new foreign partner in West Qurna 2 because Lukoil’s stake is too large for the government to afford,” said Walid Khaddouri, an Iraqi energy expert and former information chief at the Organisation of Arab Petroleum Exporting Countries.
Reuters news agency quoted sources last week as saying that ExxonMobil is studying a potential bid for West Qurna 2 while Iraqi sources, quoted by Al-Iqtisad news, said they expected Chinese companies to join the race for that field given their strong presence in Iraq after they won most of the contracts awarded within Iraq’s oil concession licensing rounds last year.
The sources said they believe PetroChina is a strong candidate to take over Lukoil’s operations in West Qurna 2 since it operates the nearby Qurna 1.
Iraq this week appeared angered by Lukoil’s decision to declare force majeure in its Qurna operations, describing it as illegal.
“The declaration is against the law because it is unilateral…the Iraqi oil ministry has not made a similar declaration although it is party to the agreement with Lukoil,” said Ali Al-Shatri, director general of the state oil marketing organisation (SOMO).
“An Iraq oil company could handle production at Qurna field in case of Lukoil withdrawal for now…another solution is that the field could be handed over to one of the foreign companies already operating in Iraq.”
(Reporting by N Saeed; Editing by Anoop Menon)
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