Chevron and Iraq Enter Exclusive Negotiations for West Qurna 2 Oilfield

• The deal follows U.S. sanctions on Lukoil that required the Russian company to sell its assets by February 28 as part of pressure on Russia
• West Qurna 2 accounts for approximately 0.5% of global oil supply and nearly 10% of Iraq's total oil output
• The agreements include data exchange provisions and exclusive negotiation rights, pending multiple regulatory approvals from Iraqi and U.S. authorities

Summary: Chevron and Iraq Enter Exclusive Negotiations for West Qurna 2 Oilfield

Key Development:

Chevron announced on February 23rd that it has entered agreements with Iraq's state-owned Basra Oil Company (BOC) to pursue exclusive negotiations for the West Qurna 2 oilfield. The deal includes confidential data exchange between the parties.

Regulatory Approvals Required:

The agreements are contingent upon approval from Iraq's Council of Ministers and the U.S. Office of Foreign Assets Control (OFAC), indicating significant regulatory hurdles remain before finalization.

Background Context:

This opportunity arose after the U.S. imposed sanctions on Russia's Lukoil, which previously operated the field. Iraq's cabinet reached an "amicable settlement" with Lukoil to transfer operations to BOC. Under U.S. sanctions, Lukoil has until February 28 to divest its assets.

Strategic Significance:

West Qurna 2 is one of the world's largest oilfields, representing:

• Approximately 0.5% of global oil supply
• Nearly 10% of Iraq's total oil output

Market Implications:

This potential acquisition would significantly expand Chevron's presence in the Middle East and provide access to substantial production capacity. The transaction reflects broader geopolitical shifts as Western energy companies capitalize on Russian asset divestments resulting from sanctions related to Russia's military actions. The deal could reshape regional production dynamics and strengthen U.S.-Iraq energy cooperation while reducing Russian influence in Iraqi oil operations.

Companies Involved:

• Chevron (acquirer)
• Basra Oil Company/Iraq (seller)
• Lukoil (previous operator, divesting)

The timeline is urgent given Lukoil's February 28 deadline, suggesting accelerated negotiations ahead.