Chevron Moves to Take Over Russia’s Most Prized Iraqi Oil Field | OilPrice.com
Simon Watkins
Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for…
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By Simon Watkins – Oct 20, 2026, 12:00 PM CDT
- Chevron moves closer to taking over Iraq’s giant West Qurna 2 oil field, securing exclusive negotiation rights following U.S. sanctions on Russia’s Lukoil.
- West Qurna 2 could double production to 800,000 bpd, with Iraq reportedly expecting Chevron to unlock the field’s substantial untapped potential.
- Washington is seeking to regain influence over Iraq’s vast oil reserves, challenging years of expanding Russian and Chinese control.
Back in February, U.S. oil and gas giant Chevron signed four preliminary agreements with Iraq’s Oil Ministry, which underscored that from that point onwards, Washington was determined to regain its influence across a country that it sees as being at least as important as any other of the leading Middle Eastern states for three key reasons. One of the deals was to develop the supergiant Nasiriyah oil field, another was to develop four other exploration blocks in Dhi Qar province, and the third was to develop the Balad oil field in Salahaddin province. The final agreement — and perhaps broadly the most important to Washington — was to transfer the management of the supergiant West Qurna 2 oil field from Russia’s Lukoil following an earlier ratcheting up of U.S. sanctions directly on Russian firms. Last week saw Chevron secure one year of exclusive negotiation rights to finalise the commercial and operational terms for taking over operatorship of this field. It was done through an advance of USD200 million on a prospective signing bonus, according to local media sources, subsequently confirmed to OilPrice.com by a senior source who works very closely with Iraq’s Oil Ministry. So, how significant is all this and why?
The three-fold significance of Iraq to the U.S. and its allies, and to China and its partners, extends far beyond its current official oil riches, very conservatively estimated at 145 billion barrels of proven crude oil reserves. Unofficially, the Oil Ministry said back in 2015 that its undiscovered resources amounted to around 215 billion barrels and a full analysis conducted in 2012 by the International Energy Agency (IEA) put the level of Iraq’s ultimately recoverable resources at around 246 billion barrels (crude and natural gas liquids). Iraq also has official gas reserves of about 3.5 trillion cubic metres (Tcm), with around three-quarters comprising associated gas. Unofficially again though, in its 2012 analysis the IEA estimated a truer figure at above 8 Tcm, with non-associated gas estimated to be at least 30 percent of this number. In short, it is an unmissable energy trove to West and East alike, particularly as, along with Iran and Saudi Arabia, Iraqi oil is the cheapest to extract anywhere in the world, with an average lifting cost of just USD1-2 per barrel. The second factor that makes Iraq so alluring to both sides is its vital geographical positioning in the heart of the Middle East. It borders Iran to the East, Kuwait and Saudi Arabia to the South, Jordan and Syria to the West, and Turkey to the North. This makes it the gateway into the long Mediterranean coastline of Syria and into the southern European markets through Turkey. It also holds a potentially threatening presence to the north of Saudi Arabia. The final major element in its appeal to the West and East is that it is an integral part of a Shia Islam counterpoint to the Sunni Islam credo of Saudi Arabia. Together with Iran, this gives it influence over the ‘Shia Crescent of Power’ that runs through the Middle East, as detailed fully in my latest book on the new global oil market order. Related: Why Invading Iran Could Become America’s Biggest Military Mistake
For a relatively long time after the U.S. military removed longtime Iraqi leader Saddam Hussein from power in 2003, Washington was able to benefit from its presence on the ground across the country, until that became seen by the Iraqis as an unwelcome overstay. Following this, and the unilateral withdrawal of the U.S. from the Joint Comprehensive Plan of Action (colloquially, ‘the nuclear deal’) with Iran, China and Russia were able to dramatically expand their presence across north and south Iraq through a variety of methods also fully analysed in my latest book. Suffice it to say here, the upshot was that over this period to now Beijing’s companies have managed to acquire control over around 34% of Iraq’s proven reserves and two-thirds of its full-capacity production, mainly in Iraq’s southern region. Russia had managed to effectively take control over northern Iraq’s main oil infrastructure in the meantime, until the process began to be reversed after the U.S. Treasury introduced a new range of blocking sanctions. These focused not just on the two corporate entities of Lukoil and Rosneft — Russia’s number two and number one oil firms, respectively — being added to the Specially Designated Nationals and Blocked Persons List, but also on key individuals connected to the firms as well. Between them, Lukoil and Rosneft were exporting approximately 3.1 million bpd, which the West sees as vital to Russia’s ability to keep funding its war in Ukraine. With sanctions applied to all entities in which these two firms held a stake of 50 percent or more, Lukoil left West Qurna 2, and Rosneft downgraded its presence in northern Iraq too.
The only complicating factor for Western firms looking to take advantage of this to return to Iraq has been to ensure that the contracts under which they are operating do not reflect the endemic culture of corruption that was prevalent in key parts of Iraq’s governmental oversight structure of the oil sector before. This was underlined for years by independent non-governmental organisation, Transparency International (TI), in its ‘Corruption Perceptions Index’, during which time Iraq regularly featured in the worst 10 out of 180 countries for its scale and scope of corruption. It was described as: “Among the worst countries on corruption and governance indicators, with corruption risks exacerbated by lack of experience in the public administration, weak capacity to absorb the influx of aid money, sectarian issues and lack of political will for anti-corruption efforts.” TI added: “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state-building and service delivery.” It concluded: “Political interference in anti-corruption bodies and politicisation of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption.” Clearly, the legal and political ramifications for Western firms of being involved in such o
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