BAGHDAD, February 25, 2026, 11:00 (GMT+3)
- Chevron secured a one-year window of exclusivity to hammer out fresh terms for Iraq’s West Qurna 2 oilfield.
- Any transfer would require both the Iraqi cabinet’s signoff and clearance from U.S. sanctions authorities.
- West Qurna 2 produces roughly 480,000 barrels a day—nearly a tenth of Iraq’s total oil output.
Chevron has locked in a year-long window to hammer out a potential deal with Iraq on the West Qurna 2 oilfield, after sanctions pressured Russia’s Lukoil out of the picture. The U.S. oil giant confirmed it’s talking with state-run Basra Oil Company, with both sides set to swap confidential information. 1
West Qurna 2 turns out around 480,000 barrels daily—close to 0.5% of world oil and about 10% of Iraq’s total. Iraq ranks as the seventh-biggest oil producer on the planet and counts itself among OPEC’s members.
There’s a strict deadline here: Lukoil faces a February 28 sell-off, pressured by U.S. sanctions. Baghdad, for its part, is scrambling to maintain operations at the field and sidestep yet another setback.
Prime Minister Mohammed Shia al-Sudani’s office said Chevron and Basra Oil Company have signed an agreement. There’s also a separate framework in place—Basra Oil Company, Lukoil, and Chevron are involved—which temporarily moves the contract to the Iraqi state firm. The contract would then go to Chevron, but only after new terms get hammered out.
The agreement is still waiting on sign-off from Iraq’s Council of Ministers. Chevron also pointed out that certain steps require approval from the U.S. Treasury’s Office of Foreign Assets Control, which handles sanctions enforcement. West Qurna 2 operates under an older “service contract”—it pays a set fee per barrel rather than giving a cut of the profits. According to industry sources, Chevron has been pushing for improved terms. 2
Chevron began reestablishing its presence in Iraq last year after reaching an agreement in principle for the Nassiriya project—part of a push by Iraq to offer better terms that also secured fresh commitments from TotalEnergies and BP. “We are confident that Chevron has the resources, experience and technology to support Iraq,” Chevron vice president of corporate business development Frank Mount said at the time. 3
In November, Lukoil invoked force majeure at West Qurna 2, according to sources who spoke with Reuters, after sanctions from the U.S. and U.K. snarled both crude shipments and payments. Iraq’s SOMO responded by canceling certain cargoes and holding back payments due to Lukoil under their current deal. 4
This week, the Financial Times said sanctions are already impacting Lukoil’s operations at West Qurna 2, forcing Iraq into talks over a potential handover as it works to maintain production levels. 5
Political hurdles and bureaucracy weigh heavily here. Any contract still needs Baghdad’s sign-off, and U.S. sanctions licensing could bog things down if Washington pushes back on the deal’s setup. Matt DiLallo at Motley Fool flagged the upside for Chevron’s production down the line, but said security and regional exposure would grow, too. 6
Iraq’s cabinet gave the green light to an “amicable settlement” with Lukoil last week, aiming to clear the way for the handover. Basra Oil Company is set to bridge operations for now, according to officials, while ownership details remain unresolved. Chevron, which wrapped up its $53 billion acquisition of U.S. producer Hess in 2025, continues to seek out big projects as it pushes into new international markets.
Certainly, Chevron holds exclusive negotiating rights and gets to review the field’s data during these talks. The sticking point? Figuring out risk and reward in a fresh contract. Should they fail to hammer out a deal inside the year, Iraq could either keep running the field itself or put it back up for grabs.
