Iraq approved on Wednesday for the state-owned Basra Oil Company to take over operational management of the West Qurna-2 oil field in the south of the country, pending offers from major American oil companies to manage the field, which is currently operated by the Russian ‘Lukoil’, a company targeted by US sanctions.
An official in the Oil Ministry stated that this measure is “temporary until Lukoil’s situation is resolved or its stake assets are sold to another party or company,” adding that the goal is “to ensure that work in the field is not affected or halted.” The field is located in Basra province and is one of the largest oil fields in the world.
Baghdad invited major American oil companies in early December to submit offers to manage this field, days after US sanctions on the Russian companies ‘Rosneft’ and ‘Lukoil’ came into effect.
Drying up sources of funding for the Russian war
The sanctions aim to dry up sources of funding for the Russian war on Ukraine, which began in February 2022, raising concerns in countries where the two companies operate.
‘Lukoil’ has managed the West Qurna-2 field for over a decade. It currently produces 480,000 barrels per day, representing about 10% of Iraq’s total crude oil production and 15% of its exports.
A statement from the Prime Minister’s media office on Wednesday said that the caretaker government approved “the Basra Oil Company taking over the management of petroleum operations in the West Qurna-2 land field, to the extent consistent with the provisions of the service and development contract.”
It also approved “working to obtain the necessary official approvals to finance petroleum operations through the ‘Majnoon’ field account, by enhancing the account through the sale of oil shipments sold by the oil marketing company SOMO.”
“Providing financial support to continue operations in the field”
The Oil Ministry official explained that resorting to this account aims at “providing financial support to continue operations in the West Qurna-2 field after the export of Lukoil’s share was hampered due to US sanctions, consequently hindering the funding of operations in the field, which require significant expenses.”
A number of Iraqi oil experts stated that the two main current competitors to manage the field are the companies ‘Chevron’ and ‘ExxonMobil’.
– ‘ExxonMobil’ returns to Iraq by signing a memorandum of understanding in the oil sector
– One killed and nine injured in a fire at an oil field in southern Iraq
The company ‘Chevron’ signed a memorandum of understanding with Iraq in mid-August, which includes developing four exploration blocks in Nasiriyah in the south and the ‘Balad’ oil field (center). As for ‘ExxonMobil’, it signed a memorandum of understanding with Iraq in October that would pave the way for developing the ‘Majnoon’ field in the south.
Iraq’s crude oil reserves are estimated at about 150 billion barrels, capable of continuing to supply global markets for over 120 years, according to authorities.
Iraq, which relies on oil for about 90% of its revenue, is the second-largest oil-producing country in the Organization of the Petroleum Exporting Countries (OPEC) and exports an average of 3.5 million barrels of crude oil per day.
Iraq
Iraq, historically known as Mesopotamia, is often called the “Cradle of Civilization” for its ancient cities like Babylon and Ur, which were centers of early writing, law, and urban development. Modern Iraq was established as a nation-state after World War I, and its rich history encompasses the Abbasid Caliphate’s Golden Age in Baghdad as well as significant archaeological heritage from Sumerian, Akkadian, and Babylonian empires.
Basra Oil Company
The Basra Oil Company is an Iraqi state-owned enterprise responsible for oil production and exploration in southern Iraq, primarily in the Basra region. It was established in its modern form in the 1970s following the nationalization of the Iraqi petroleum industry, which had been previously controlled by foreign-owned consortiums like the Iraq Petroleum Company.
West Qurna-2 oil field
The West Qurna-2 oil field is a major oil field in southern Iraq, located approximately 65 kilometers northwest of Basra. It is one of the world’s largest oil fields and was discovered in 1973, but its large-scale development only began in 2010 through a consortium led by Russian energy giant Lukoil.
Lukoil
Lukoil is a major Russian multinational energy corporation, primarily focused on the production, refining, and marketing of petroleum products. It was founded in 1991 following the dissolution of the Soviet Union, emerging from the state-owned oil industry to become one of the world’s largest publicly traded oil companies.
Basra province
Basra province is a historically significant region in southern Iraq, situated along the Shatt al-Arab waterway. It was founded in the 7th century as a military encampment and grew into a major center of trade and Islamic scholarship during the Abbasid Caliphate. Today, it remains Iraq’s principal port and a key hub for the country’s oil industry.
Baghdad
Baghdad is the capital of Iraq, founded in the 8th century by the Abbasid Caliph Al-Mansur. It became a major center of the Islamic Golden Age, renowned for the House of Wisdom, before suffering significant destruction from invasions and modern conflicts.
Rosneft
Rosneft is a major Russian state-controlled oil and gas company, founded in 1993 after the dissolution of the Soviet Union’s oil industry. It grew significantly through acquisitions, most notably purchasing the assets of the former Yukos company, and is now one of the world’s largest publicly traded petroleum companies.
Ukraine
Ukraine is a country in Eastern Europe with a rich history dating back to the medieval state of Kyivan Rus. It has experienced periods of independence as well as rule by various empires, before re-establishing its sovereignty with the dissolution of the Soviet Union in 1991. The country is known for its diverse cultural heritage, Orthodox Christian cathedrals, and the Black Sea coastline.
Majnoon field
The Majnoon oil field is a large oil field located in southern Iraq near the Iranian border, discovered in 1975. Its name, meaning “crazy” in Arabic, refers to the field’s vast and complex reservoir of oil and gas. The site was heavily damaged during the Iran-Iraq War in the 1980s and has since undergone significant redevelopment to restore its production capacity.
SOMO
SOMO is a contemporary art museum located in Amsterdam, Netherlands, which opened in 2016. It is housed in a former telephone exchange building and focuses on exhibiting digital and new media art, reflecting the intersection of technology and modern culture.
Chevron
Chevron is a major American multinational energy corporation, originally founded in 1879 as the Pacific Coast Oil Company in California. It grew through mergers, most notably with Standard Oil of California, and today is one of the world’s largest integrated oil and gas companies.
ExxonMobil
ExxonMobil is a multinational oil and gas corporation formed in 1999 through the merger of Exxon and Mobil, whose respective histories trace back to the Standard Oil Company founded by John D. Rockefeller in 1870. It is one of the world’s largest publicly traded companies and a major player in the energy industry, with operations spanning exploration, production, refining, and chemical manufacturing.
Nasiriyah
Nasiriyah is a city in southern Iraq, founded in the late 19th century near the ancient ruins of Ur, one of the world’s earliest cities and the traditional birthplace of Abraham. It serves as the capital of Dhi Qar Province and is a major cultural and administrative center in the region, historically significant for its proximity to Sumerian archaeological sites.
Balad oil field
The Balad oil field is located in Iraq’s Salah ad-Din Governorate and was discovered in 1976. It is a significant production site, historically managed by the state-owned North Oil Company, and its operations have been impacted by conflicts over the decades.
Organization of the Petroleum Exporting Countries
The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its primary purpose is to coordinate and unify the petroleum policies of its member countries to ensure stable oil markets and secure a steady income for producers.
OPEC
OPEC, or the Organization of the Petroleum Exporting Countries, is an intergovernmental organization founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its primary purpose is to coordinate and unify the petroleum policies of its member countries to secure fair and stable prices for oil producers.
