Chevron is negotiating improved contractual terms with Iraq as it weighs acquiring the West Qurna 2 oilfield from Russia’s Lukoil, after Iraq nationalised the asset following US sanctions linked to the Ukraine war
US oil major Chevron is pressing Iraq to improve the commercial terms of the giant West Qurna 2 oilfield as a condition for buying the project from Russia’s Lukoil, Reuters reported on Tuesday, citing sources familiar with the matter.
The talks come weeks after Iraq moved to nationalise the field following US sanctions on Lukoil, part of Washington’s effort to pressure Moscow over its war in Ukraine. The sanctions have made it increasingly difficult for Lukoil to operate its overseas assets, including West Qurna 2, one of the world’s largest oilfields.
West Qurna 2 accounts for around 0.5 per cent of global oil supply and nearly 10 per cent of Iraq’s crude output.
Chevron, oil ministry in talks on terms
Days after the nationalisation, Iraq’s oil minister confirmed that discussions were under way with Chevron regarding the field. According to the report, Chevron and the Iraqi oil ministry are negotiating improved contractual terms to ensure better returns on the project.
Any agreement on revised terms would require approval from Iraq’s cabinet, the report said.
Iraq’s oil ministry said negotiations with Chevron were continuing. “The negotiations are still ongoing, with many details remaining under discussion,” the ministry told Reuters.
Under the US sanctions regime, Lukoil has until February 28 to divest its stake in West Qurna 2.
Strategic push into Iraq
A deal for West Qurna 2 would mark a deeper push into Iraq for Chevron, following its broader international expansion after completing the $53 billion acquisition of US oil producer Hess in 2025.
Iraq, the world’s seventh-largest oil producer, has in recent years sought to lure back global oil majors by improving the terms of its upstream contracts. Over the past two years, Baghdad has shifted away from rigid service contracts towards profit-sharing agreements, reversing an earlier exodus of foreign producers frustrated by low returns.
Major companies such as TotalEnergies and BP have signed deals with combined investment pledges exceeding $50 billion, signalling renewed confidence in Iraq’s oil sector.
Lukoil’s West Qurna 2 project, however, falls under the older service contract model. Signed in the aftermath of the 2003 US-led invasion, it is considered one of the least lucrative contracts in Iraq’s portfolio, according to the report.
Output growth, targets missed
Iraq’s crude output has risen to more than 4 million barrels per day in 2025, up from around 2.5 million bpd before 2003. Still, the country has fallen well short of the ambitious post-war targets it once set of boosting capacity to between 9 million and 12 million bpd.
In the interim, state-run Basra Oil Company has taken over operations at West Qurna 2 for an initial 12-month period while ownership issues are resolved, two company officials told Reuters.
For Iraq, securing a new operator on improved terms could help stabilise production at one of its most critical assets. For Chevron, the outcome of the talks will determine whether West Qurna 2 fits into its strategy of pursuing higher-return projects amid heightened geopolitical and sanctions-related risks.
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