Overview
Chevron is seeking enhanced financial terms from Iraqi authorities as a condition for taking over operations at the West Qurna 2 oilfield from Russia's Lukoil, according to sources familiar with the negotiations. Iraq moved to nationalise the field earlier this month after U.S. sanctions on Lukoil complicated the Russian firm's ability to run its international projects, including West Qurna 2.
Negotiations under way
Representatives of Chevron and Iraq's oil ministry are engaged in talks aimed at improving the contractual arrangement for the giant field. The parties remain in discussion over many details, and sources say any renegotiated contract would need the approval of Iraq's cabinet before it could be finalised. A Chevron spokesperson declined to comment on commercial negotiations but stated that the company does not comment on commercial matters and that it operates under a code of business ethics and applicable laws and regulations.
Sanctions and timing
Lukoil currently faces a deadline to divest its assets as a result of U.S. sanctions, with the company required to sell by February 28. The sanctions were imposed to increase pressure on Russia amid its ongoing conflict in Ukraine and have constrained Lukoil's capacity to manage international assets like West Qurna 2.
Operational control and interim management
In the immediate aftermath of nationalisation, Iraq assigned state-run Basra Oil Company to operate West Qurna 2 for a 12-month period while the ownership and contractual issues are resolved, two officials at the company told Reuters. The interim operational arrangement is intended to maintain production as decisions on long-term ownership and terms are negotiated.
Size and strategic importance of West Qurna 2
West Qurna 2 is one of the world's largest oilfields. It accounts for about 0.5% of global oil supply and nearly 10% of Iraq's output, making its ownership and operational status material to both national production and international supply considerations.
Chevron's expansion in Iraq
A successful acquisition of West Qurna 2 would represent a further step in Chevron's expansion in Iraq, following agreements to develop several fields in the country and the company's completion of a deal to acquire U.S. oil producer Hess for $53 billion in 2025. Iraq has, in recent years, moved to improve contract terms offered to international oil majors to attract investment and boost output.
Iraq's contract reforms
Baghdad shifted its contracting model from service contracts to profit-sharing agreements in an effort to entice major oil companies back after a period in which low returns prompted many producers to leave. Top international firms have since signed new deals in Iraq with combined investment pledges exceeding $50 billion. The prior service contract framework under which Lukoil operated West Qurna 2 is understood to deliver relatively small returns compared with the newer agreements industry sources say.
Production context and targets
Iraq's oil output has risen to more than 4 million barrels per day in 2025 from roughly 2.5 million bpd before the U.S. invasion in 2003. Despite this growth, the country has not met earlier ambitious promises to lift capacity to between 9 million and 12 million bpd. The outcome of the West Qurna 2 negotiations may feed into broader efforts to attract investment and raise production levels.
Statements from the parties
Iraq's oil ministry confirmed that talks with Chevron were ongoing and that many details remained under discussion. Lukoil did not respond to a request for comment. Chevron reiterated that it evaluates opportunities globally and complies with applicable laws and regulations.
Concluding context
The discussions between Chevron and Iraq highlight the interplay between sanctions-driven asset transfers, nationalisation actions, and the commercial terms required to bring major international investors into long-standing projects. As talks continue and the February 28 divestment deadline approaches for Lukoil, attention will remain focused on the pace and terms of any transfer of West Qurna 2's operations and ownership.