UPDATE 3-Iraq to nationalise West Qurna 2 oilfield operations, government says

Iraq's cabinet has approved plans to nationalise operations at the West ⁠Qurna 2 oilfield, one of the world's largest, as the government looks to avert disruptions stemming from U.S. sanctions imposed on Russian stakeholder Lukoil. State-run Basra Oil Company will take over the oilfield's operations for 12 months, two officials ​at the firm told Reuters.

Iraq's cabinet has approved plans to nationalise operations at the West ⁠Qurna 2 oilfield, one of the world's largest, as the government looks to avert disruptions stemming from U.S. sanctions imposed on Russian stakeholder Lukoil.

State-run Basra Oil Company will take over the oilfield's operations for 12 months, two officials ​at the firm told Reuters. "We aim to keep production running smoothly as Iraq navigates uncertainty over U.S. sanctions ‍and will look for potential buyers for Lukoil's stake during the 12-month period," one Basra Oil official said.

Lukoil declared force majeure in November at West Qurna 2 as it was hit with sanctions alongside fellow Russian oil producer Rosneft as part of U.S. President ⁠Donald ‌Trump's push to end the war ⁠in Ukraine. The sanctions have drawn bids from about a dozen investors, including U.S. oil majors Exxon Mobil, Chevron, and private equity firm ‍Carlyle, according to sources.

"The state-run Basra Oil Company will cover local staff salaries, operational expenses, and payments to subcontractors, using ​an account linked to the Majnoon oilfield to help facilitate the process," an Iraqi oil manager ⁠at the oilfield told Reuters. Production remains steady at around 465,000 to 480,000 barrels per day, the official said.

The government said in a statement ⁠on Wednesday that the cabinet had agreed to seek approvals to finance operations through the Majnoon oilfield account, to be boosted by proceeds from crude shipments sold by state oil marketer SOMO. Lukoil's 75% operational stake ⁠in the oilfield was its biggest foreign asset. The company has until January 17 to sell its overseas assets ⁠under the latest deadline ‌set by the U.S. Treasury.

The field accounts for about 0.5% of global oil supply and 9% of output in Iraq, OPEC's second-largest producer after Saudi Arabia.

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