Lukoil declared force majeure at its Iraqi oil field, sources told Reuters on Monday, and Bulgaria was poised to seize its Burgas refinery, as the Russian company’s international operations buckled under the strain of U.S. sanctions.

The force majeure at the West Qurna-2 field in Iraq marks the biggest fallout yet from the sanctions imposed on Russian oil majors Lukoil and Rosneft last month as part of U.S. President Donald Trump’s push to end the war in Ukraine.

Four sources with knowledge of the matter told Reuters that Lukoil sent a letter to Iraq’s oil ministry last Tuesday saying force majeure conditions prevented it from continuing normal operations at West Qurna-2.

Lukoil did not immediately respond to a Reuters request for comment on Monday.

Lukoil is the Russian company with the most exposure to international markets. Its attept to sell its foreign assets to Swiss commodity trader Gunvor failed last week after the U.S. Treasury signaled Washington opposed the deal.

LUKOIL RISKS EXITING ITS MOST PRIZED FOREIGN ASSET

Located 65 kilometers (40 miles) northwest of the port of Basra, West Qurna-2 is one of the world’s largest oilfields and Lukoil’s most prized foreign asset.

It accounts for around 9% of Iraq’s total oil output and is currently producing around 480,000 barrels per day, two oilfield officials said.

If the reasons behind the force majeure are not resolved within six months, Lukoil will shut production and exit the project entirely, a senior Iraqi oil industry official said.

Reuters had reported last week that Iraq’s state oil firm SOMO canceled loadings of three crude oil cargoes from Lukoil’s equity production at the oilfield over the sanctions.

And three of the sources on Monday said Iraq had halted all cash and crude payments to the company due to the sanctions.

Payments to Lukoil will remain frozen until there is a contractual adjustment securing a mechanism for developing the oilfield and a way of making payments to non-sanctioned entities, said one of the sources, an oil ministry official.

About 4 million barrels of crude oil allocated for in-kind payments to Lukoil for November have, meanwhile, been canceled, the official said.

SOMO will not be able to continue its crude oil supply contract with Lukoil until the issues behind these sanctions are resolved, the source added.

BULGARIA PREPARES TO SEIZE BURGAS REFINERY

By declaring force majeure as permitted under its contract, Lukoil is seeking legal protection against penalties for failing to meet contractual obligations with the oil ministry, another Iraqi official said.

Lukoil in an email sent on Friday terminated the services of all non-Russian foreign staff, a manager at West Qurna-2 said, meaning only Russian and Iraqi Lukoil staff remain.

Separately on Monday, Bulgaria’s Prime Minister Rosen Zhelyazkov said authorities were conducting inspections and implementing security measures at Lukoil’s Burgas oil refinery.

The government is looking to sustain its operation while preparing to seize control of the site.

Last week, Bulgaria adopted legal changes allowing it to take over the refinery and sell it to a new owner.

Source: Reuters reported by Aref Mohammed and Ahmed Rasheed; Writing by Ahmed Rasheed and Yousef Saba; Editing by Joe Bavier and Jason Neely