Iraq Reaches Settlement with Lukoil on West Qurna 2 Oil Field Transfer

Settlement Details and Implications

CAIRO, Feb 17 (Reuters) - The Iraqi cabinet approved on Tuesday an "amicable settlement" with Russia's Lukoil over the transfer of operations of the giant West Qurna 2 oil field to the state-run Basra Oil Company, according to a statement.

Last month, Iraq nationalised the oilfield after the U.S. imposed sanctions on Lukoil to put pressure on Russia to end its war in Ukraine.

West Qurna, which is one of the world's largest oilfields, accounts for about 0.5% of global oil supply and nearly 10% of Iraq's output.

Background on Lukoil and U.S. Sanctions

The nationalization of West Qurna 2 oil field comes as talks continue with U.S. oil major Chevron over the field.

Future of Chevron in Iraq

Lukoil has until February 28 to sell its assets under the U.S. sanctions.

Three sources told Reuters last month that Chevron and the Iraqi oil ministry are in talks on improving the contractual terms. Any deal on new terms would require Iraq's cabinet approval, two of the three sources said.

A deal for Chevron in West Qurna 2 would mark a further push into Iraq for the U.S. oil major after it agreed to develop several fields in the country as part of an international expansion since completing a deal to acquire U.S. oil producer Hess for $53 billion in 2025.

Basra Oil Company's Role

Basra Oil Company has taken over the field's operations for 12 months while waiting for the ownership issue to be resolved, two officials at the firm told Reuters.

(Reporting by Menna Alaa El-Din and Muhammad Al GebalyEditing by Gareth Jones)