Lukoil has announced force majeure at Iraq’s massive West Qurna-2 oilfield, according to four sources familiar with the situation, after Western sanctions on the Russian oil giant disrupted its operations.
Lukoil did not immediately respond to a request for comment from Reuters.
Last month, the United States and Britain sanctioned Rosneft and Lukoil, Russia’s two largest oil firms.
As a result, Iraq has stopped all cash and crude payments to Lukoil, three sources stated.
Last Tuesday, Lukoil sent a letter to Iraq’s oil ministry citing force majeure conditions that hinder its ability to maintain normal operations at West Qurna-2, according to the sources.
If these force majeure issues remain unresolved within six months, Lukoil plans to cease production and exit the project entirely, an Iraqi oil industry official disclosed.
Reuters previously reported that Iraq’s state oil company SOMO canceled the loading of three crude oil shipments from Lukoil’s production at the oilfield due to the sanctions.
West Qurna-2, a major global oilfield, stands as Lukoil’s most valuable foreign asset, located 65 kilometers northwest of Basra’s southern port.
The field contributes about 9% of Iraq’s total oil production, currently producing approximately 480,000 barrels per day, according to two oilfield officials.
Crude oil volumes designated for in-kind payments to Lukoil for November, around 4 million barrels, have been canceled, a source from the oil ministry revealed.
Under U.S. sanctions, payments to Lukoil from its Iraqi operations are frozen until a contractual adjustment ensures a mechanism for developing the oilfield and enables payments to non-sanctioned entities, the oil ministry official explained, noting that Iraq cannot engage with companies under U.S. sanctions.
SOMO cannot continue its crude oil supply contract with Lukoil until these sanctions issues are resolved, the source added.
Lukoil’s force majeure declaration aligns with its contract terms, and the company is seeking legal protection from penalties for failing to meet contractual obligations with the oil ministry, another Iraqi official mentioned.
On Friday, Lukoil ended the services of all non-Russian foreign staff via email, leaving only Russian and Iraqi staff, according to a manager at West Qurna-2.
On Monday, Bulgaria’s Prime Minister Rosen Zhelyazkov said authorities are inspecting and implementing security measures at Lukoil’s Burgas oil refinery as the government plans to continue its operations while preparing to seize control.
Last week, Bulgaria enacted legal changes allowing it to take over the refinery and sell it to a new owner.
