Sanctions Snarl Lukoil—Baghdad Pays Up to Protect 480,000 bpd of Oil Production

By Julianne Geiger - Nov 25, 2025

Iraq has quietly stepped in to keep one of its most important oilfields from wobbling. After two months of unpaid wages at Lukoil’s West Qurna-2, Baghdad has begun paying local staff directly, advancing December salaries to prevent a slowdown at a field that supplies roughly 0.5% of global oil and nearly a tenth of Iraq’s output—production that Iraq cannot replace from elsewhere.

This is the first visible stress fracture in West Qurna-2 since Washington’s October 22 sanctions froze Lukoil’s ability to move money across borders. Previously, Lukoil wired salaries from abroad every month. Once sanctions hit, the transfers stopped, tensions rose, and the threat became obvious: if workers walked, 460,000–480,000 barrels a day of oil production would be at risk.

But Baghdad has no appetite for that scenario. The country’s export system is running flat out, and its other fields are incapable of absorbing a sudden drop without disrupting state revenues. It should come as no surprise, then, that the government decided to act as an emergency paymaster. Not for Lukoil, but for self-preservation.

This intervention lands just weeks after Lukoil declared force majeure at the same field, after Iraq halted all cash and crude settlements tied to the sanctioned firm. It also comes as Baghdad seeks a six-month U.S. waiver so Lukoil can finalize a sale of its 75% stake—an exit that U.S. and EU officials privately view as a sanctions win and a strategic rollback of Russian influence in Iraq’s oil sector.

The trouble is, West Qurna-2 isn’t plug-and-play. Iraqi officials admit the field is too complex for state companies to absorb. Baghdad is vetting at least three potential buyers—one Chinese, two Western—with Washington signaling it will block any transaction that strengthens Moscow’s position or exploits the sanctions loophole.

Until a buyer emerges and a waiver is granted, Iraq is effectively babysitting a Russian megaproject to keep global supply steady. It’s an awkward arrangement: Russia’s stake is frozen, the U.S. is calling the shots, Iraq is covering payroll, and 480,000 barrels a day hang in the balance.

By Julianne Geiger for Oilprice.com

CRIMINAL CAPITALI$M

 

Mozambique LNG Project Restart Faces New War Crimes Allegations

By Tsvetana Paraskova - Nov 18, 2025

The European Center for Constitutional and Human Rights (ECCHR) said on Tuesday it had filed a criminal complaint in France against TotalEnergies for complicity in war crimes, torture, and enforced disappearance at the Mozambique LNG site in 2021.   

According to the NGO’s complaint, the French supermajor “is accused of having directly financed and materially supported the Joint Task Force, composed of Mozambican armed forces, which between July and September 2021, allegedly detained, tortured and killed dozens of civilians on TotalEnergies’ gas site.”

The European NGO has filed the complaint with the French National Anti Terrorism Prosecutor (PNAT), which also has a mandate to investigate international crimes. 

The ECCHR claims that TotalEnergies knew of human rights violations committed by armed forces before the massacre.  

The complaint is being filed just as TotalEnergies lifted the four-year-long force majeure on the Mozambique LNG project, which was stalled due to the precarious security situation near the site of the planned $20-billion export facility. 

TotalEnergies has been accused several times of being complicit in violence at the site or near it, but the French group has rejected it had any knowledge of such incidents.  

Following a Politico article last year, which is the basis for the new complaint by the ECCHR, TotalEnergies published the response of Mozambique LNG regarding the alleged violence. 

“Mozambique LNG would like to clearly state that it has no knowledge of the alleged events described in your “Story Summary” and has never received any information indicating that such events took place,” the company operating the project said in September 2024 in response to the article. 

TotalEnergies and its partners appear to be close to restarting the development of the project in Mozambique, which hinges on Mozambican government approval and an updated budget and schedule. The goal to achieve first LNG production has slipped, first to 2027, and later, to 2029.  

By Tsvetana Paraskova for Oilprice.com 

TotalEnergies to Appeal French Antitrust Fine Over Corsica Fuel Supply

By Charles Kennedy - Nov 18, 2025

TotalEnergies (TTE) said it will appeal a decision by France’s Competition Authority that fined the company for allegedly restricting access to petroleum product depots in Corsica—an accusation the company firmly disputes after years of investigation.

The regulator’s ruling centers on a 2016 contractual clause governing access to shared oil depots on the island. According to TotalEnergies, the clause allowed depot shareholders priority access but did not block non-shareholder distributors, who could still obtain fuel under separate contractual arrangements. The company insists the Authority failed to demonstrate any measurable anti-competitive impact, either on the local distributor that filed the complaint or on consumers.

The French Competition Authority concluded that the depot-access clause constituted an anti-competitive practice and issued a fine. TotalEnergies argues the finding lacks evidentiary support, noting that the complaining distributor maintained its retail footprint, increased fuel volumes, and sourced product from multiple suppliers throughout the period under review.

The ruling closes a four-year inquiry involving multiple hearings and site inspections. Fuel logistics in Corsica are particularly sensitive due to the island’s geographic isolation, high transport costs, and limited infrastructure. TotalEnergies has been one of Corsica’s main suppliers for six decades and currently operates 47 service stations across the island, including rural sites that depend heavily on stable supply.

The company also highlighted recent fuel-price measures it implemented to support local purchasing power, including a €0.20-per-liter discount in 2022 and a price cap of €1.99 per liter that remains in effect.

TotalEnergies says it “struggles to see” how its behavior could be deemed anti-competitive given the supply dynamics and the absence of consumer harm. The company will challenge the ruling before the Paris Court of Appeal.

In a notable escalation, TotalEnergies warned that the fine is disproportionate relative to the profitability of its Corsican marketing operations. As a result, it has launched a strategic review that could reshape—or potentially curtail—its long-standing downstream presence on the island.

The case comes as European regulators maintain heightened scrutiny over fuel supply chains, market concentration, and pricing practices, especially in island territories where infrastructure constraints can amplify competition concerns. For energy investors, the outcome may influence how multinational suppliers structure joint-infrastructure agreements and regional pricing strategies in constrained markets.

By Charles Kennedy for Oilprice.com

 

Freeport plans to restore large-scale production at Grasberg in Q2 2026

Staff Writer | November 18, 2025 | 

View from the Grasberg mine, Papua. Credit: Richard Jones | Flickr

Freeport McMoRan (NYSE: FCX) says it plans to restore large-scale production at Indonesia’s Grasberg minerals district from the second quarter of 2026, following a fatal incident that halted operations earlier this year.

On Sept. 8, a catastrophic mudslide released 800,000 metric tons of wet material into Grasberg’s Block Cave underground mine, resulting in the death of seven workers. Since then, Freeport has declared force majeure and completed an investigation into the incident, the details of which are yet to be disclosed.

Remediation activities are currently being advanced to prepare for a phased restart and ramp-up of the Grasberg Block Cave underground mine beginning in Q2 2026, the US copper mining giant said in a press release on Tuesday.

As previously reported, Freeport has already resumed activities at the Deep Mill Level Zone and Big Gossan underground mines, which it said were not affected by the mud flow. Together with the Block Cave, they form one of the world’s largest copper-gold mine complexes, producing 1.7 billion lb. of copper and 1.4 million oz. of gold annually. The Grasberg district is situated in the remote highlands of the Sudirman Mountains in Central Papua.

Freeport serves as Grasberg’s operator and holds an approximate 49% interest, while the rest is owned by the Indonesia government.

“We have incorporated the learnings from the recent tragic incident into our future plans and are implementing several initiatives to address the conditions that led to the incident,” Freeport’s chief executive Kathleen Quirk said in the Tuesday press release.

Production forecasts

According to Freeport, Grasberg’s in 2026 production will be similar to 2025 at about 1 billion lb. of copper and 900,000 oz. of gold — about 35% lower than its pre-incident estimates following a September revision.

However, the company expects production to rise in the following three years, averaging 1.6 billion lb. of copper and 1.3 million oz. of gold between 2027-2029. The Block Cave mine, which accounts for half of Grasberg’s entire mineral reserves, is set to account for a majority (70%) of that production.

Freeport opened the Tuesday session 5.8% higher at $41.27 a share in New York, for a market capitalization of $56 billion.

Oil Prices Slip Despite Lukoil Declaring Force Majeure in IraqBy Irina Slav - Nov 11, 2025


Crude oil prices opened lower today even after Russia’s Lukoil declared force majeure on its operations in one of Iraq’s biggest oil fields because of the latest U.S. sanctions.

At the time of writing, Brent crude was trading at $63.84 per barrel, with West Texas Intermediate at $59.89 per barrel, as reports suggest record high volumes of oil in floating storage, following Washington’s latest sanction salvo against Moscow.

Reuters reported on Monday, citing unnamed sources, that Lukoil had declared a force majeure on the West Qurna-2 field, which produces some 400,000 barrels of crude daily. Following the October 22 U.S. sanctions on Lukoil and Rosneft, Iraq had stopped all cash and crude payments to Lukoil, the sources told the publication. The Russian major has a 75% stake in the field.


Even so, the dominant sentiment on oil markets continues to be bearish thanks to projections of an oversupply. “As OPEC production increases grind on, global oil balances are acquiring an increasingly bearish hue on the supply side of the ledger with demand still trending lower in conjunction with a slowed economic growth path among major oil-consuming countries,” one outlet that shares the sentiment, Ritterbusch and Associates, said in a note as quoted by Reuters.
President Trump, meanwhile, said that he was close to closing a trade deal with India, noting that the latter had “stopped doing the Russian oil — it’s been reduced very substantially,” as quoted by Bloomberg.Now, oil traders would be awaiting OPEC’s latest monthly report, scheduled to be released tomorrow and coinciding with the International Energy Agency’s own monthly report. Both are likely to stick to their demand and supply projections, where OPEC sees demand as much stronger than the IEA, and the IEA expects a massive supply overhang, where OPEC sees a market more or less in balance.


By Irina Slav for Oilprice.com

Lukoil’s Iraq Exit Marks Major Sanctions Victory for the West

By Simon Watkins - Nov 10, 2025

• Lukoil is withdrawing from its core energy interests in Iraq, specifically the West Qurna 2 oil field, following a new wave of U.S. and E.U. sanctions targeting Russia's ability to fund the war in Ukraine.
• 
  
• The exit is considered a major geopolitical victory for the West, opening new opportunities for companies like ExxonMobil, BP, and TotalEnergies to expand their influence in Iraq's oil sector.
• 
  
• Lukoil’s departure was also driven by long-standing disputes with Iraq's Oil Ministry over the low remuneration rate of $1.15 per barrel and unmet production targets at the West Qurna 2 field

Russia’s second-largest oil producer Lukoil is withdrawing from its core energy interests in Iraq following the recent tightening of the sanctions noose around the country by the West. The latest prohibitions introduced by the U.S. on 22 October included measures directly aimed at Lukoil, and Russia’s top oil producer Rosneft. Between them, the two companies export approximately 3.1 million barrels of oil per day, which the West sees as vital to Russia’s ability to keep funding its war in Ukraine. Lukoil’s almost immediate capitulation of its huge West Qurna 2 oil field and Block 10 assets in Iraq marks a “major turning point” in the West’s fightback against increasingly aggressive Russia and Chinese moves against the allies, a senior Washington-based legal source who works closely with the U.S. Treasury exclusively told OilPrice.com last week. “It’s a big Russian major leaving two of its critical oil developments in one of its key areas of interest in the Middle East – it doesn’t get much bigger than that,” he added. Moreover, Lukoil’s exit from the major Iraq oil and gas sites opens new opportunities for Western firm to further extend the West’s resurgent influence across Iraq.

Washington and London are delighted with the news, according to the source, for three key reasons. First, Lukoil’s quick announcement of its exit underscores how effective the new set of sanctions on Russia is. The measures are part of a full range of blocking sanctions overseen by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) including not just the two corporate entities of Lukoil and Rosneft (and their multiple subsidiaries) being added to the Specially Designated Nationals and Blocked Persons List but key individuals connected to the firms as well. Moreover, both firms’ interests in the U.S. are now blocked, and all the U.S.’s companies and citizens are barred from any dealings with either. Targeting Russia’s top two oil firms is a huge step up from what the previous sets of sanctions that encompassed lower-tier firms such as Gazpromneft and Surgutneftegas, which were in turn part of Washington’s gradual ‘tightening of the screws’ on Putin. The second reason is that the European Union (E.U.) continued to mirror such prohibitions against the cogs financing Russia’s war machine in Ukraine, as seen in its 19th sanctions package. These include additional measures targeting Russia’s shadow fleet of vessels used to evade current restrictions. And for the first time, the E.U. also targeted Russia’s crucial liquefied natural gas (LNG) sector, having earlier agreed to halt all Russian gas imports by 1 January 2027 – one year earlier than previously agreed. This was part of a broader 16 October vote to accelerate the union’s phaseout of Russian oil, gas, and LNG, which also saw the proposal to implement a full ban on Russian oil imports into the region from 1 January 2026. The third reason is how difficult Lukoil has so far found it to dispose of its Iraqi assets, which Washington and London are taking as a sign that the sanctions in place against Moscow now appear so strong and well-coordinated that they are a true deterrent to other actors who in the past may have looked to support Russia. Most notable in this context was that Swiss-based trading firm Gunvor has lost interest in pursuing such talks with Lukoil.

It is also the case, from Iraq’s perspective, that it was seeing diminishing returns in its ongoing relationship with Lukoil, not just from the geopolitical pressure the U.S. was bringing to bear, but also from a petro-economic one. On the first point, as analysed in full in my latest book on the new global oil market order, the battle for influence over Iraq’s oil fields is about a lot more than  just oil. Indeed, a source who works closely with the E.U.’s energy security apparatus exclusively told OilPrice.com at the time, that a very high-ranking official from the Kremlin said that: “By keeping the West out of energy deals in Iraq, the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise.” On the second point, Baghdad had long endured problems with Lukoil on the site, which means it may have been happier than it has let on to yield to U.S. pressure regarding the firm. The original development plan for the West Qurna 2 field – with estimated recoverable oil reserves of around 13 billion barrels and one of the lowest lifting costs in the world at just US$2-3 per barrel -- was to produce 1.8 million barrels per day (bpd). However, this was amended in 2013 to a three-stage plan, with peak production set at 1.2 million bpd. Phase 1 would add around 120,000 barrels per day (bpd) to the early 30,000 bpd of production from the site’s Mishrif Formation. Phase 2 would add another 400,000 bpd from the full development of the Mishrif Formation. And Phase 3 would add another 650,000 bpd from the development of the deeper Yamama formation. 

However, it was around the time of the transition from Phase 2 to Phase 3, scheduled to start in the middle of 2017, that trouble began on the Russian side. Lukoil believed the level of remuneration it was receiving per barrel drilled was too low. It was being paid US$1.15 per barrel recovered—the lowest rate paid to any international oil company (IOC) in Iraq at that time — and dwarfed by the US$5.50 per barrel being paid to GazpromNeft for its development of the Badra oil field. Making matters worse for Lukoil at that point was that it had already spent at least US$8 billion in developing West Qurna 2, and compounding this grievance was the fact that Iraq’s Oil Ministry still owed it around US$6 billion in remuneration on recovered barrels and other development payments. In August 2017, a senior source who works closely with Iran’s Petroleum Ministry exclusively told OilPrice.com at the time, Lukoil was assured that Iraq’s Oil Ministry would very quickly pay the US$6 billion that it owed the company and that a higher compensation rate per barrel would be looked into as soon as was feasible. In addition, the Oil Ministry agreed to extend Lukoil’s from 20 to 25 years, so lowering the average yearly cost to the Russian firm. It was also agreed that Lukoil would invest at least US$1.5 billion in West Qurna 2 in the following 12 months with a view to raising production from the 400,000-bpd level closer to the 1.2 million bpd peak production target. 

Crucially for what followed, though, according to the Iran source, Lukoil knew back then that it was perfectly capable of producing at least 635,000 bpd on a sustained basis, having hit 650,000 bpd production over extended periods in August and September 2017, and with its engineers having assured senior management that 635,000-bpd production was achievable on an ongoing basis with no problems. Unfortunately for the Russians, the end of November 2017 saw Iraq’s Oil Ministry discover that Lukoil was holding out on it, followed by a subsequent threat to withhold all payments due to Lukoil until it began to increase production steadily up to the 635,000-bpd level that its own production tests had shown was perfectly achievable. In response, and after several IOCs withdrew from Iraq, Lukoil’s senior management believed the time was right to try again to force the Oil Ministry to honour its previous promises to increase its per-barrel compensation on the West Qurna 2 field. Surprisingly for the Russians, the Oil Ministry’s response was to say that it was fine if Lukoil wanted to leave but that before it did so it would pay compensation in lieu of the upfront investment that it promised in 2017 and promised again in 2019 as it was not meeting the time-sensitive oil production targets that it had agreed to. 

As it now stands, the way looks clear for any permutation of Western firms that have re-entered Iraq’s oil sector since Donal Trump began his second presidential term to take up where Lukoil left off in West Qurna 2. It might look like a good opportunity for U.S. oil giant ExxonMobil, given its longstanding involvement in the neighbouring West Qurna 1 field. Great Britain’s BP remains involved in the huge Rumaila field and following its strategy reset in February back to a more fossil-fuel focus it may be a good fit for them. Any Western company would also have the knowledge that France’s TotalEnergies is now also firmly established in country in its US$27 billion four-pronged deal aimed at improving the core infrastructure across Iraq’s oil and gas sector. Most notably here, the French firm is building out the vital Common Seawater Supply Project, aimed at boosting pressure in Iraq’s key field to increase and extend well productivity. 

By Simon Watkins for Oilprice.com 

 

Lukoil Declares Force Majeure at Huge Iraqi Oilfield After U.S. Sanctions

By Charles Kennedy - Nov 10, 2025

Russian oil giant Lukoil has declared force majeure at the 400,000-barrels-per-day West Qurna-2 oilfield in Iraq after the U.S. sanctions on Russia’s top oil firms, sources familiar with the matter told Reuters on Monday. 

Following the October 22 U.S. sanctions on Lukoil and Rosneft, Iraq has stopped all cash and crude payments to Lukoil, according to Reuters’ sources. 

Last week, reports emerged that Iraq’s state oil marketing company SOMO had canceled three crude loadings from Lukoil this month after the U.S. sanctioned the second-biggest Russian oil producer last month. 

The three loadings from Lukoil from its production at West Qurna-2 were scheduled for November 11, 18, and 26, but Iraq apparently doesn’t want to handle the now-sanctioned barrels, market sources told Reuters last week. 

Lukoil has a 75% equity stake in Iraq’s giant West Qurna-2 oilfield, which produces more than 400,000 barrels per day (bpd) of crude oil.

Following the U.S. sanctions on Lukoil and Rosneft, oil traders and operators globally are steering clear of any cargoes of the two biggest Russian oil firms to avoid drawing the attention of the Trump Administration and being slapped with secondary sanctions.

After the U.S. sanctions on Lukoil and Rosneft, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine,” Lukoil announced it would sell all of its international assets, and reached a preliminary agreement with Switzerland-based commodity trader Gunvor to sell these.

However, Gunvor last week pulled the $22-billion bid for Lukoil’s international business after the U.S. Treasury Department signaled it was not happy with the deal, calling the company a Russian “puppet”. 

“President Trump has been clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never get a license to operate and profit,” the U.S. Treasury said in an X post.

With no immediate deal for Lukoil to sell international assets, West Qurna-2 being one of the biggest, the near-term production and supply from the giant Iraqi oilfield looks increasingly uncertain.  

By Charles Kennedy for Oilprice.com 

Force majeure refers to extraordinary events or circumstances beyond the control of the parties involved in a 

contract, which can prevent them from fulfilling their contractual obligations.

Definition and Origin

Force majeure is a French term that translates to "superior force." In legal contexts, it describes events that are 

unforeseen and unavoidable, such as natural disasters (earthquakes, floods), wars, riots, or pandemics. The concept is rooted in civil law and is commonly included in contracts to protect parties from liability when such events disrupt the expected course of events. 

Sanctions Force Lukoil Into Force Majeure at Giant Iraqi Oilfield

Iraqi officials had reportedly blocked three Lukoil export loadings at Iraqi terminals, among other measures (USN file image)

Published Nov 10, 2025 5:39 PM by The Maritime Executive

 

American sanctions on Russian oil giant Lukoil have forced the company to declare force majeure for its Iraqi operations, taking nearly 10 percent of the nation's entire production offline through the closure of the giant West Qurna-2 oilfield, according to local and international media sources. The move follows the Iraqi government's decision to cancel payments and export loadings for Lukoil over sanctions concerns. 

West Qurna-2 is a supergiant 12.9 billion barrel reservoir near the port of Basra, Iraq. It was developed by Lukoil and Statoil (now Equinor) in the 2010s, and currently produces about 480,000 bpd of crude. It is part of the braoder West Qurna Field, one of the largest oilfields in the world (by total recoverable barrels). 

Lukoil owns 75 percent of West Qurna-2, and it is the firm's most valuable foreign asset. It had planned to invest billions of dollars to increase the field's output in the years ahead, but given Iraq's strict application of U.S. sanctions on the Russian firm, those plans appear off the table unless there is a change in regulatory circumstances. Iraq has cut off cash payments and in-kind oil allocations to Lukoil, and has reportedly canceled three of the firm's export loadings for the month of November. Lukoil has also reportedly had to lay off its international staff at the West Qurna-2 field, though it has been able to retain its Russian and Iraqi workforce. 
  
If the sanctions situation does not change, local officials told Reuters that Lukoil could exit the field entirely within six months. If the company seeks a buyer for its Iraqi holdings, any would-be purchaser could encounter U.S. compliance difficulties: Russian-linked commodity trader Gunvor was in talks to buy all of Lukoil's international holdings, including West Qurna-2, but backed out after threats of sanctions from the U.S. Treasury Department. 

If Lukoil exits the West Qurna-2 field without selling its rights to a successor, it could clear the way for a Western operator to step in, according to Oilprice.com. American, British and French oil majors might all take an interest in West Qurna-2's abundant reserves. 

In the meantime, the force majeure declaration will lower Iraq's oil production by about 480,000 barrels per day, about 0.5 percent of the global oil market. Brent futures were largely unaffected, closing at $64 per barrel.