Russian Oil Giant Lukoil Declares Force Majeure at Iraq’s West Qurna-2 Over Sanctions

Russian oil giant Lukoil has declared force majeure at the West Qurna-2 oil field in Iraq, one of the world’s largest, citing increasing operational difficulties due to Western sanctions.

As reported by Reuters on November 10, the announcement was made after US sanctions on Russian oil firms began to significantly impact Lukoil’s ability to operate internationally. According to four sources familiar with the situation, the sanctions have disrupted payments and logistics, prompting Iraq to halt all payments to the company.

In a letter sent last Tuesday to Iraq’s Ministry of Oil, Lukoil cited “force majeure conditions that prevent the continuation of normal operations” at the site. A senior official in Iraq’s oil sector told Reuters that unless the situation is resolved within six months, Lukoil may cease production entirely and withdraw from the project.

The force majeure declaration follows last week’s cancellation by Iraq’s state oil marketing company SOMO of three planned crude oil shipments from the field, citing complications related to sanctions. SOMO reportedly cannot continue contractual obligations with Lukoil until a new arrangement is in place that allows for payments to non-sanctioned entities.

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West Qurna-2, located about 65 kilometers northwest of the southern port of Basra, is considered Lukoil’s most valuable overseas asset. It accounts for roughly 9% of Iraq’s total oil production, currently producing around 480,000 barrels per day, according to local officials.

Sources also told Reuters that approximately four million barrels of crude designated for Lukoil’s November payments have been suspended. The US sanctions have effectively frozen revenues from Lukoil’s operations in Iraq until a revised contract framework can be established.

An Iraqi oil official noted that the force majeure claim is consistent with contract terms, and Lukoil is seeking legal protection from penalties related to non-fulfillment of its obligations.

Additionally, an internal company email sent last Friday reportedly instructed the termination of all non-Russian foreign personnel at the site, leaving only Russian and Iraqi staff to continue operations.

The future of the West Qurna-2 project now hinges on resolving the legal and financial complications introduced by international sanctions, as both sides navigate a path forward under significant geopolitical and commercial strain.

Earlier, it was reported that evidence suggests a substantial volume of Russian-origin oil, totaling millions of tonnes, has been channeled through a port facility where Macquarie Bank holds a partial ownership interest, raising concerns that these shipments may have ultimately reached Australian markets.

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