Lukoil Declares Force Majeure At Major Iraqi Oil Field Due To New US Sanctions

Via The Cradle

Russian energy corporation Lukoil has declared force majeure at Iraq’s West Qurna-2 oil field as a result of US sanctions on the firm, four sources told Reuters on Monday. 

“Iraq has halted all cash and crude payments to Lukoil,” the sources said. The Russian energy firm operated Iraq’s West Qurna-2 oil field, which produces 480,000 barrels per day (bpd). 

Lukoil holds a 75 percent stake in the field, one of the largest in the world. It also holds a 50 percent stake in Egypt’s West Esh El-Mallaha (WEEM) oil fields and a 10 percent stake in the UAE offshore Ghasha project, while maintaining a network across Europe and Central Asia.

The report comes as the energy firm has been suffering significant disruptions in its operations due to recent US sanctions. 

Romania and Bulgaria have been scrambling to protect Russian-owned oil refineries from shutdowns before the US sanctions take effect. 

Bulgaria has proposed a bill that would allow its government to appoint a manager of the Lukoil-owned Burgas refinery, granting them powers to take operational control of the facility, approve its sale, and potentially nationalize it.

The US Treasury Department announced the sanctions last month, targeting Lukoil and another major Russian oil company, Rosneft. The sanctions were imposed as part of a US bid to pressure Russia in Ukraine talks, which reached a stalemate earlier this year. 

This coincided with an announcement by Swiss commodity trader Gunvor that it has withdrawn a proposal to buy Lukoil’s foreign assets. The US Treasury had accused Gunvor of being a Russian “puppet,” and expressed Washington’s opposition to the deal. 

“We believe that all legitimate interests of a major international company, including a Russian one, like Lukoil, in terms of international trade and economic relations, must be respected,” Kremlin spokesman Dmitry Peskov said in response to the move. 

Lukoil was forced to sell many of its foreign assets after the US sanctions last month, which caused a surge in global oil prices. The sanctions froze all Rosneft and Lukoil assets in the US, while US companies and individuals will be barred from doing business with them.

Washington is also threatening secondary sanctions against foreign financial institutions that do business with the two Russian energy firms, including banks that facilitate sales of Russian oil in China, India, and Turkiye.