The Iraqi cabinet has approved the nationalisation of petroleum operations at the West Qurna 2 oilfield, one of the largest in the world, in line with a service contract previously signed with Russia’s Lukoil, the government announced Wednesday.

To ensure smooth financing, the cabinet agreed to channel funds through the Majnoon oilfield account, supported by crude sales handled by state oil marketer SOMO. The Basra Oil Company will manage salaries, operational costs, and subcontractor payments using this mechanism, according to an oil manager at the West Qurna 2 site.

Production at the field remains stable, averaging between 465,000 and 480,000 barrels per day. Officials from Iraq’s Oil Ministry said the takeover was aimed at preventing disruptions linked to sanctions imposed on Lukoil, which declared force majeure at the site in November after being targeted alongside Rosneft in U.S. sanctions tied to the war in Ukraine.

The sanctions have attracted interest from around a dozen potential investors, including ExxonMobil, Chevron, and private equity firm Carlyle, sources noted. Lukoil’s 75% stake in West Qurna 2 represented its largest foreign holding.

The oilfield contributes roughly 0.5% of global supply and accounts for 9% of Iraq’s total production, underscoring its strategic importance for OPEC’s second-largest producer after Saudi Arabia.