Chevron has signed memorandums of understanding with the Iraqi government to take over two major oilfields and will evaluate pipeline routes that bypass the Strait of Hormuz, a move that could secure long-term production growth for the energy giant. The agreements advance the company’s push into a resource base that Iraq believes can deliver 600,000 barrels per day from the Nassiriya project within seven years of development start, while West Qurna 2 already pumps about 460,000 barrels per day, accounting for roughly 0.5 percent of global supply and nearly 10 percent of Iraq’s output.
The West Qurna 2 field came under Iraqi control last year after the United States imposed sanctions on its former operator, Russia’s Lukoil, and Chevron has been in exclusive talks to assume management. Nassiriya consists of four exploration blocks alongside the development of currently producing fields. Formal MOUs for both assets now put Chevron a step closer to operational control, and the company is also discussing technical studies for export pipeline alternatives with Iraqi officials.
The Strait of Hormuz closure has already exacted a heavy toll on Iraq’s finances. Production from the country’s main southern fields initially plunged 70 percent to 1.3 million barrels per day because crude could not be exported through the waterway amid Iranian attacks on shipping, and output remained more than 50 percent below its pre-war level in June. With oil representing about 90 percent of government income and funding nearly all public spending, Baghdad approved a study agreement among its Basra Oil Company, Chevron and other partners to assess strategic export routes.
One option under review is reviving the Kirkuk-Baniyas pipeline to Syria, which has sat largely dormant since suffering damage during the 2003 U.S.-led invasion. Iraq is not alone in seeking alternatives. The United Arab Emirates expects to finish a second bypass pipeline next year that would double its export capacity outside the Strait, while Saudi Arabia is weighing a 2 million barrel per day expansion of its Red Sea line. Seven projects under construction or in planning could lift the region’s total bypass capacity to more than 14 million barrels per day by the end of 2028, exceeding 60 percent of pre-war export volume.
For Chevron, securing operational control of West Qurna 2 and the Nassiriya development would represent a significant addition to its reserve base, but the commercial value hinges on reliable export logistics. Investors should watch whether the pipeline studies translate into binding commitments and financing, and whether Iraqi political consensus holds long enough to bring new infrastructure online.