Iraq to Nationalise West Qurna 2 Oilfield Operations, Government Says

Iraq is making headlines this week with a bold decision: the government has announced plans to nationalise operations at the West Qurna 2 oilfield, one of the largest and most vital oil assets in the country.
This step comes amid geopolitical tensions, economic uncertainty, and concerns about the stability of oil production. For a nation where oil revenues fund everything from public salaries to infrastructure, keeping West Qurna 2 running smoothly is critical.
But what does this move really mean — and why now?
West Qurna 2: Iraq’s Oil Powerhouse
West Qurna 2 isn’t just another oilfield. Located near Basra in southern Iraq, it produces between 465,000 and 480,000 barrels per day — roughly 9% of Iraq’s total output and about 0.5% of global supply.
That makes it strategically vital. Any disruption in production could have ripple effects on Iraq’s economy and even global oil markets. Historically, the Russian giant Lukoil has managed the field, holding a 75% stake under a service contract. But recent developments forced Baghdad to reconsider this arrangement.
Why Iraq Is Taking Control Now
The catalyst? Sanctions on Lukoil over Russia’s actions in Ukraine. In late 2025, Lukoil declared force majeure, citing sanctions that prevented it from fulfilling contractual obligations.
That raised alarms in Baghdad. If Lukoil couldn’t operate normally, Iraq risked losing vital oil production. The solution? Bring operations under state control through the Basra Oil Company (BOC), the government’s own oil management firm.
For now, this nationalisation is temporary — planned for about 12 months — giving Iraq time to maintain production while exploring future ownership solutions.
How Iraq Plans to Keep Production Running
According to officials, BOC will handle day-to-day operations, from paying staff to covering operating costs. Revenue from other major oilfields, like Majnoon, will help fund operations at West Qurna 2.
The government assures that production remains steady at pre-nationalisation levels, a key point for Iraq’s economy and its commitments to OPEC. Maintaining output stability also signals to international markets that Iraq is managing the transition carefully.
The Geopolitical Context
Nationalising West Qurna 2 cannot be separated from global politics. Sanctions against Russian companies disrupted Lukoil’s ability to operate, forcing Iraq to act.
By taking control, Iraq safeguards its energy security and reduces dependence on foreign companies that may be vulnerable to political pressure or sanctions. It’s a clear example of how geopolitics can directly affect energy production.
What Comes Next? Potential Buyers and Partnerships
Although Iraq has nationalised operations temporarily, it’s not shutting the door to foreign investment. Reports suggest interest from major players like ExxonMobil and Chevron, as well as private equity firms, to acquire Lukoil’s stake in the long term.
This creates a balancing act: Iraq wants the technical expertise and investment that foreign companies can bring, while also asserting sovereign control over one of its most important resources.
Global Implications
For the world, Iraq’s move is significant. West Qurna 2 contributes nearly half a million barrels of oil per day to the global market. Keeping production stable protects not just Iraq’s economy, but also global energy prices.
At the same time, the episode highlights how international sanctions and politics can have unintended consequences, forcing nations to make tough decisions to maintain essential operations.
A Strategic Assertion of Control
Ultimately, Iraq’s nationalisation of West Qurna 2 is about more than oil. It’s about energy security, national sovereignty, and strategic autonomy.
Whether the takeover remains temporary or evolves into a longer-term model involving foreign partners, it underscores a larger truth: oil is not just a commodity in Iraq — it’s a matter of national security.
For investors, governments, and energy watchers, the West Qurna 2 story is a reminder of how interconnected geopolitics, sanctions, and energy markets have become.
Key Takeaways:
Iraq has nationalised West Qurna 2 operations due to Lukoil’s sanctions-related operational issues.
The move is temporary, allowing state control while exploring future ownership.
Production is being maintained through the Basra Oil Company and revenue from other oilfields.
The decision reflects a mix of economic necessity, geopolitical pressure, and strategic sovereignty.
Global oil markets are watching closely, as disruptions could affect supply and prices.