The Iraqi cabinet approved what it described as an “amicable settlement” with Russia’s Lukoil over the transfer of operations at the giant West Qurna 2 oil field to the state-run Basra Oil Company, Reuters reported, citing an official statement.

The move follows Baghdad’s decision last month to nationalize the field after the United States imposed sanctions on Lukoil as part of efforts to pressure Moscow over the war in Ukraine. West Qurna 2 is one of the world’s largest oilfields, contributing roughly 0.5% of global oil supply and nearly 10% of Iraq’s total crude output.

The nationalization comes as discussions continue with U.S. energy major Chevron regarding potential involvement in the field. Lukoil has until February 28 to divest its assets in compliance with U.S. sanctions.

Previously, Chevron and Iraq’s oil ministry were negotiating improved contractual terms for the project. Any revised agreement would require cabinet approval.

A potential deal would deepen Chevron’s footprint in Iraq, adding to its recent expansion in the country following its $53 billion acquisition of Hess in 2025.

Basra Oil Company has assumed operational control of West Qurna 2 for a 12-month period while the ownership structure is finalized, according to company officials.