The Iraqi government has approved a move to take over operations at the West Qurna 2 oilfield under provisions in its technical service contract with Russia’s Lukoil, following the company’s declaration of force majeure in November, Reuters reported on Wednesday.
The step allows Iraq to ensure continued production after Lukoil cited operational constraints linked to Western sanctions on Russia. West Qurna 2, one of Iraq’s largest producing fields at around 470,000 barrels per day, is state-owned and operated under a service contract, with the government now assuming day-to-day operational responsibilities, including the payment of staff salaries.
Following U.S. sanctions on Russian energy firms, a number of countries have moved to step into the day-to-day running of Lukoil’s overseas assets, including refineries and fuel retail networks, tapping into trusteeships or special administration to keep energy supplies flowing, while at the same time stabilizing domestic fuel markets and blocking asset transfers under sanctions rather than permanently seizing ownership.
In Bulgaria, legislation has allowed the appointment of a government special administrator to oversee operations at Lukoil’s refinery to safeguard fuel supply. Romania has taken a similar approach, approving emergency powers that allow authorities to install administrators at sanctioned companies, including parts of Lukoil’s fuel retail and refining network, to prevent market disruption.
Meanwhile, Moldova has adopted a softball approach, negotiating with Lukoil to buy specific infrastructure such as assets at the Chisinau airport in a bid to secure critical functions. Similarly, Hungary, through its energy giant MOL, is actively exploring buying Lukoil’s assets in the region, specifically targeting refineries and fuel stations in countries like Serbia (NIS), Romania and Bulgaria as it seeks to secure energy supplies and manage fallout from Russian sanctions.
By Alex Kimani for Oilprice.com
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