Iraq could nearly double production from the West Qurna 2 oil field to 800,000 barrels per day after Chevron entered exclusive talks to take over operations from Russia’s Lukoil, Iraq’s oil minister said on Wednesday.
Iraq aims to increase oil and gas production, and oil majors are racing to expand operations in the country, having previously scaled back due to years of political instability.
Oil Minister Hayan Abdelghani told Kurdish television station Rudaw that production could increase from 750,000 barrels per day to 800,000 barrels per day after Chevron takes over operations at the field. The US company secured exclusive rights for one year to negotiate takeover of the project.
The deal expands Chevron’s footprint by giving it control of one of the world’s largest oil fields, which accounts for nearly 10% of Iraq’s production and about 0.5% of global supply.
Chevron had already agreed to develop several fields in the country as part of its international expansion.
The agreement with Chevron is the latest in a series of agreements with global oil majors, including Exxon (XOM.N), BP (BP.L) and Total Energy (TTEF.PA), in which Baghdad is offering more generous terms as it seeks to expand production.
Iraq, the second-largest producer in the OPEC+ group of allies including the Organization of the Petroleum Exporting Countries and Russia, plans to increase its oil production capacity to more than 6 million barrels a day by 2029.
The country frequently exceeds production targets agreed with OPEC+.
The deal could also strengthen ties between Baghdad and Washington, and threatens to limit access to Iraq’s oil revenues if Iranian-backed groups are incorporated into the next government.
But the deal with Chevron brings Iraq more closely aligned with Western energy interests by replacing sanctioned Russian company Lukoil with a major American company as part of a broader effort to isolate Moscow over the Ukraine war.
Lukoil declared force majeure in West Qurna 2 in November after being sanctioned along with Rosneft as part of U.S. President Donald Trump’s push to end the war in Ukraine.
In January, Iraq stripped Lukoil of the right to operate the oil fields and temporarily transferred them to the state-run Basra Oil Company (BOC).
In January, Iraq’s cabinet announced that an “amicable settlement” with Lukoil regarding the transfer had been approved. A final agreement must be approved by the Iraqi Cabinet and the U.S. Office of Foreign Assets Control, Chevron said.
(Reporting by Nayera Abdallah; Editing by Christopher Cushing, Louise Heavens and Clarence Fernandez)
