By: AGBI

Iraq has appointed the state-run Basra Oil Company to manage petroleum operations at West Qurna-2, one of the world’s largest oilfields.

The move, finalised during a cabinet meeting, is in line with the provisions of a service contract signed with Russia’s Lukoil, according to a statement released by the Iraqi prime minister’s media office.

Basra Oil will cover local staff salaries, operational expenses and payments to subcontractors, using an account linked to the Majnoon oilfield to help facilitate the process, Reuters quoted an Iraqi manager at West Qurna-2 as saying.

In addition, the cabinet approved proceeding with financing operations from the Majnoon account, using income from crude shipments sold by state oil company Somo.

No financial details were disclosed.

In December, Iraq said it would hold talks with US oil companies about selling Lukoil’s stake in West Qurna-2, following sanctions against the Russian giant.

The ministry will approach American oil producers as part of a process to transfer the Russian company’s share in the southern 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 remaining 25 percent held by Iraqi state-owned North Oil Company.

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