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Sanctions Force Lukoil Into Force Majeure at Giant Iraqi Oilfield

Lukoil
Iraqi officials had reportedly blocked three Lukoil export loadings at Iraqi terminals, among other measures (USN file image)

Published Nov 10, 2025 5:39 PM by The Maritime Executive

 

American sanctions on Russian oil giant Lukoil have forced the company to declare force majeure for its Iraqi operations, taking nearly 10 percent of the nation's entire production offline through the closure of the giant West Qurna-2 oilfield, according to local and international media sources. The move follows the Iraqi government's decision to cancel payments and export loadings for Lukoil over sanctions concerns. 

West Qurna-2 is a supergiant 12.9 billion barrel reservoir near the port of Basra, Iraq. It was developed by Lukoil and Statoil (now Equinor) in the 2010s, and currently produces about 480,000 bpd of crude. It is part of the braoder West Qurna Field, one of the largest oilfields in the world (by total recoverable barrels). 

Lukoil owns 75 percent of West Qurna-2, and it is the firm's most valuable foreign asset. It had planned to invest billions of dollars to increase the field's output in the years ahead, but given Iraq's strict application of U.S. sanctions on the Russian firm, those plans appear off the table unless there is a change in regulatory circumstances. Iraq has cut off cash payments and in-kind oil allocations to Lukoil, and has reportedly canceled three of the firm's export loadings for the month of November. Lukoil has also reportedly had to lay off its international staff at the West Qurna-2 field, though it has been able to retain its Russian and Iraqi workforce. 
  
If the sanctions situation does not change, local officials told Reuters that Lukoil could exit the field entirely within six months. If the company seeks a buyer for its Iraqi holdings, any would-be purchaser could encounter U.S. compliance difficulties: Russian-linked commodity trader Gunvor was in talks to buy all of Lukoil's international holdings, including West Qurna-2, but backed out after threats of sanctions from the U.S. Treasury Department. 

If Lukoil exits the West Qurna-2 field without selling its rights to a successor, it could clear the way for a Western operator to step in, according to Oilprice.com. American, British and French oil majors might all take an interest in West Qurna-2's abundant reserves. 

In the meantime, the force majeure declaration will lower Iraq's oil production by about 480,000 barrels per day, about 0.5 percent of the global oil market. Brent futures were largely unaffected, closing at $64 per barrel.