Lukoil Faces Shutdown at West Qurna-2 Amid Sanctions

Lukoil has declared force majeure at Iraq's West Qurna-2 oilfield due to Western sanctions impacting operations. Iraq halted payments to Lukoil following US and UK sanctions. If unresolved within six months, Lukoil may exit the project. Iraqi oil firm SOMO already canceled loadings from Lukoil's output.

Lukoil has announced a force majeure at the massive West Qurna-2 oilfield in Iraq. This development follows Western sanctions that have disrupted the Russian company's operations, four informed sources disclosed on Monday.

Sanctions imposed last month by the United States and Britain have targeted Lukoil, Russia's second-largest oil company. In response, Iraq has ceased all payments to the firm, both in cash and crude, according to three of the sources. Last week, Lukoil sent an official communiqué to Iraq's oil ministry indicating that force majeure conditions are obstructing regular functioning at the West Qurna-2 site.

A high-ranking official within Iraq's oil sector warned that if these hindrances are not cleared within six months, production will halt and Lukoil will potentially withdraw from the operation entirely. Additionally, Reuters has reported that Iraq's state oil company SOMO has already scrapped the loading of three crude oil shipments from Lukoil's production at the West Qurna-2 oilfield due to the sanctions.

(With inputs from agencies.)