Lukoil Declares Force Majeure in Iraq as Sanctions Increase Pressure

Lukoil has declared force majeure at the West Qurna-2 oil field in Iraq, according to sources cited by Reuters, while Bulgaria moves towards taking control of the company’s Burgas refinery. The measures reflect the growing impact of recent US sanctions on Lukoil’s international operations.

The force majeure notice was sent to Iraq’s oil ministry last week. This decision follows sanctions placed on major Russian producers Lukoil and Rosneft as part of Washington’s efforts to exert pressure over the war in Ukraine.

West Qurna-2 is one of the world’s largest oil fields and is considered Lukoil’s key foreign asset. It contributes roughly 9% of Iraq’s total oil output and currently produces around 480,000 barrels per day. If the situation is not resolved within six months, Lukoil may cease production and withdraw entirely, an Iraqi oil industry official said.

Iraq has already suspended both cash transfers and crude shipments to Lukoil while a new payment framework is discussed. Around 4 mln barrels allocated for November compensation have been cancelled. Iraq’s oil marketer SOMO has also paused loadings under Lukoil’s equity share.

By invoking force majeure, Lukoil is seeking protection from penalties for failing to fulfil contract terms. The company has also ended the contracts of all non-Russian foreign staff at the site, leaving only Russian and Iraqi personnel in place.

Meanwhile in Bulgaria, the government has stepped up oversight of the Burgas refinery and is preparing to take control of the plant. Recent legal changes allow authorities to assume ownership and transfer operations to a new buyer if required.

Kursiv also reports that Swiss commodity trader Gunvor announced on November 6, that it has withdrawn its offer to acquire the foreign assets of Russian energy giant Lukoil.