Baghdad invites US firms to replace Lukoil at West Qurna-2

The Iraqi Oil Ministry has formally invited major US energy firms to compete for operating control of the West Qurna-2 field, initiating a bidding process to replace Russia’s Lukoil. In a statement, the ministry noted that transferring the field’s management to an American operator would “serve mutual interests, support global market stability, and ensure the continuity of Iraq’s production and state revenues.”

The move follows considerable geopolitical friction. Lukoil, which holds a 75% stake in the asset, declared force majeure on November 4, according to Reuters, after being hit with US and UK sanctions in October 2025 regarding Russia’s war in Ukraine. An earlier attempt to divest its stake to Switzerland-based Gunvor collapsed when the US Treasury declined to licence the transaction.

West Qurna-2 is a critical asset, holding an estimated 14bn barrels of recoverable reserves and generating roughly 10% of Iraq’s total output. Despite the corporate upheaval, energy officials confirmed that production remains steady at 460,000-480,000 barrels per day (bpd).

To prevent operational slowdowns caused by payment channel disruptions, the Iraqi government recently intervened to settle overdue wages for local staff in Iraqi dinars. This intervention was viewed as critical to maintaining stability at the facility, which has generated over $50bn in revenue for the state since operations began.

US super-majors are already mobilising. Reuters reported on 18 November that ExxonMobil has joined Chevron in exploring acquisitions of Lukoil’s international assets, following US Treasury authorisation for discussions through 13 December. Sources told Reuters that ExxonMobil is assessing options in Kazakhstan, where it partners with Lukoil on the Karachaganak and Tengiz projects, and is examining a bid for West Qurna-2.

This potential re-entry comes after Exxon exited the neighbouring West Qurna-1 project in 2023. Interest is also high elsewhere; Reuters sources noted that US private equity group Carlyle is among potential bidders.

Commercial terms remain a focal point for incoming operators. Under the current Technical Services Contract, remuneration is capped at $1.15 per barrel. According to Wood Mackenzie, net profit drops to just $0.19 per barrel of oil equivalent after performance factors are applied. However, it is understood that ‘improved conditions’ may be tabled to incentivise development of the Yamama formation, a key component of plans to raise capacity.

An acquisition would follow Exxon’s October signing of a heads of agreement for the development of the Majnoon field. With reserves of nearly 13bn barrels, Majnoon – which translates as ‘insane’ – has historically “failed to fulfil much of its potential,” yet represents a massive strategic opportunity within Iraq’s push to reach a production capacity of 6mn bpd by 2029.