Chevron Eyes Major Iraqi Oil Field Amid Geopolitical Shifts

Chevron gains exclusive talks to potentially take over Iraq's second-largest oil field from sanctioned Russian firm Lukoil, facing regulatory hurdles and competition.

Chevron is positioning itself for potential entry into one of Iraq's most significant oil fields, a move driven by geopolitical realignments. The current operator, Russia's Lukoil, is under pressure from U.S. sanctions to divest international assets. This situation presents a rare opportunity for the U.S. energy giant, though the path forward is laden with regulatory hurdles and competitive challenges.

A Coveted Asset and Exclusive Negotiating Rights

The focus is on the West Qurna 2 field, Iraq's second-largest oil-producing asset. Reports indicate it currently yields approximately 460,000 barrels per day, accounting for roughly 0.5% of global oil supply. Chevron has now secured a critical advantage: exclusive negotiating rights for twelve months with Iraq's state-owned Basra Oil Company. This privilege allows Chevron to discuss taking over the field's management.

This development follows a decision by the Iraqi cabinet to transfer the operator role from Lukoil to a government entity. However, Chevron has stipulated that any operational takeover is contingent on renegotiated contract terms.

The Sanctions Driving the Sale

Lukoil's need to exit is urgent. The Russian firm declared force majeure on the project in November 2025. Furthermore, U.S. sanctions mandate that Lukoil must sell its international assets by the end of February 2026. Iraq has signaled a clear preference for U.S. companies as replacement operators, making Chevron a natural candidate. Lukoil currently holds a 75% stake in West Qurna 2, earning a fee of $1.15 per barrel produced.

Beyond this specific field, Chevron has also established development frameworks with Iraq's Dhi Qar Oil Company and North Oil Company. These agreements cover potential work on the Balad and Nasiriyah fields, as well as four separate exploration blocks in the region.

Regulatory Hurdles and a Bidding War

Finalizing any deal is subject to stringent approvals from both the Iraqi government and the U.S. Office of Foreign Assets Control (OFAC). Meanwhile, a competitive bidding process is underway. Chevron, partnering with Quantum Capital on a counter-offer, finds itself in direct competition with the Carlyle Group.

Carlyle is reported to have already reached a preliminary, non-exclusive agreement to acquire the bulk of Lukoil's international oil and gas portfolio, a package valued at an estimated $22 billion. The central questions now are which consortium will ultimately receive the necessary green lights and under what specific conditions.

Chevron's shares recently reached a new 52-week high of €157.14. Whether the exclusive talks materialize into a final agreement will likely be determined in the coming weeks and months, hinging on the newly negotiated contract terms and the crucial clearances from OFAC and Iraqi authorities.