Baghdad has considered bringing Lukoil and Gazprom Neft, Gazprom's oil division, into the West Qurna project in southern Iraq in favor of Exxon.
News agency RT, citing an industry insider, reported last month that Baghdad was frustrated with Exxon's work in the Kurdish north and could send a signal with the replacement.
Lukoil Chief Executive Officer Vagit Alexperov said from Moscow the company, which already has a stake in the two-phase project, expects to make expansion decisions by the end of the year.
"We are looking at the main issue now, synergy," he was quoted by Bloomberg News as saying. "What economic synergies the company will get if these two projects work together."
Norwegian energy company Statoil transferred its 18.75 percent stake in West Qurna-2 to Lukoil earlier this year. Exxon has a 60 percent stake in West Qurna-1.
Baghdad in April declared a Kurdish deal with U.S. supermajor Exxon frozen because of legal issues surrounding oil contracts in the country. The central government says unilateral deals with the semiautonomous Kurdish government to be illegal.