Iraqi Government Ensures Oilfield Stability Amid Sanctions

The Iraqi government has resolved delayed salary payments for staff at the West Qurna-2 oilfield, operated by Lukoil, to maintain oil production despite U.S. sanctions on the Russian company. The intervention prevents disruptions that could affect global oil supply, with the field crucial for Iraq's export capabilities.

The Iraqi government has intervened to ensure that delayed salaries for local staff at the Lukoil-operated West Qurna-2 oilfield are paid, mitigating the risk of production disruptions despite U.S. sanctions on the Russian entity, according to three Iraqi energy officials.

A halt in the field's operations would affect the global oil market, as Qurna-2 contributes approximately 0.5% to the world's total supply and around 9% of Iraq's overall oil output, making Iraq OPEC's second-largest producer after Saudi Arabia. The sanctions, announced on October 22, complicated Lukoil's ability to transfer funds to Iraq, necessitating government intervention to facilitate payments, according to unnamed officials.

Salaries were paid after two months of delays, ensuring that production wasn't affected. Authorities will also advance December salaries, paid in Iraqi dinar, to prevent further disruption. Production continues steadily at 460,000 to 480,000 barrels per day, crucial for Iraqi exports given existing capacity constraints.

(With inputs from agencies.)