By: AGBI

The Iraqi cabinet has approved an “amicable settlement” with Russia’s Lukoil over the transfer of operations of the West Qurna-2 oilfield, one of the world’s largest, to the state-run Basra Oil Company.

In January, the government appointed Basra Oil to manage operations at West Qurna-2 following US sanctions against the Russian oil giant over the Ukraine conflict.

In December last year, Baghdad had said it would hold talks with US oil companies about the sale of Lukoil’s stake in the field.

Located 65km northwest of the port of Basra, West Qurna-2’s initial recoverable reserves come to around 14 billion barrels. More than 90 percent of the reserves are in the Mishrif and Yamama accumulations, according to Lukoil’s website.

Lukoil holds a 75 percent interest in West Qurna-2, with the rest held by Iraqi state-owned North Oil Company.

The concession accounts for 9 percent of Iraq’s output. The country is the second-largest producer in Opec after Saudi Arabia.

“The amicable settlement particularly concerns invoices and the employment of certified foreign personnel,” the state-run Iraq News Agency reported, quoting a cabinet statement. 

The tax due on the salaries of foreign employees shall be treated as final revenue for the state treasury, it added. No financial details were disclosed.

US-based ExxonMobil was among the first Western oil companies to enter Iraq to develop oil fields after the US invasion in 2003. But it left the West Qurna project due to what sources described as poor returns.

It signed an agreement in October with Iraq to help develop its giant Majnoon oilfield and expand oil exports.

Majnoon, 60km from Basra in southern Iraq, is one of the world’s largest oilfields, with an estimated 38 billion barrels in place.

On Tuesday the Arab Energy Fund (Taef), formerly known as Apicorp, said it had secured funding to expand and develop an onshore oilfield in southern Iraq.